OUE

OUE: Talks on a potential F&N offer may herald a bidding war, CIMB says, adding it will be positive for Thai Beverage as it will crystallize its 29% F&N stake's value. Expect OUE to announce a higher bid, whether acting with another party or alone, and TCC to counter offer. Note that F&N's F&B business is "highly complimentary" to ThaiBev's non-alcoholic beverage business; "TCC/ThaiBev will not want to lose it without a fight. It believes TCC Assets has the means to counter offer, noting a counter bid at $11.22/share, the high end of the independent financial advisor's estimated fair-value range, would be a total consideration of S$11.4b adjusted for the APB cash on F&N's books, it would be an "achievable" $5.8b from TCC, it estimates. If TCC ends up losing, it will not reap the synergies, but enjoy a divestment gain. ThaiBev stands to gain between $300m and $1.3b for a bid in the range of $9.50 to $12." CIMB keeps ThaiBev at Outperform with $0.60 target.