FNN / APB / Thai Bev

FNN / APB / Thai Bev: FNN & APB both request trading halt, ahead of FNN’s Friday decision deadline on whether to accept Heineken’s offer of $50/sh for FNN’s stake in APB. While FNN is reportedly seeking a higher offer price, Heineken has indicated that there has been “no change in its proposal”. Meanwhile, Thai Bev, which has a deemed 24.1% stake in FNN, has flagged its resolve to stay invested in FNN. Highlights that it wants to continue to increase its holdings in FNN shares to seek collaboration, but is not interested in buying out the co. Nevertheless, there continues to be market talk that Thai Bev could be open to a quick sale of its FNN stakes, should it be able to make a good enough return. In a surprise move, Coca-Cola has now joined the fray in this corporate M&A tussle, and is said to be exploring a bid for FNN’s dairy and soft-drinks businesses, which could be worth as much as US$3b. Coke hasn’t made a decision and is awaiting to see what other suitors do. Coke is deciding whether to find a partner to take FNN’s line of mixers and tonics and may drop its plans if it can’t find one. Recall, FNN had a 75 yr franchise agreement with Coke in Spore, before splitting up in 2010. FNN’s operations would give Coke the biggest share of soft drink sales in Msia and Spore. Coke has had two banks reviewing the FNN assets and while executives in Asia are interested, a final decision to bid will be made at Coke’s HQ in Atlanta. The sequence of events so far, point to a high possibility of FNN eventually being split up into 3 parts – APB, non-alcoholic F&B, and property (and other invmts). In such a scenario, the conglomerate discount that FNN trades at could be lifted. Nomura has an SOTP valuation of $9.64, which values APB at Heineken’s offer price of $50/sh.