F&N

F&N: OUE leading a consortium in a $13.1b bid to take over F&N, and has managed to get Kirin Holdings on its side. The consortium is offering $9.08 /share - 20 cents (or 2.25 per cent) higher than Thai tycoon Charoen Sirivadhanabhakdi's offer of $8.88 per share. The consortium also includes funds managed by Farallon Capital, LLC and Noonday Global Management. The OUE consortium's offer made through a special purpose vehicle called OUE Baytown - is conditional upon its receiving enough acceptances to control at least 50% of F&N. The move will see Kirin tender its entire 15% stake in F&N to OUE for $1.9b, and Kirin then aims to buy back F&N's food and beverage operations for about S$2.7b. The takeover bid via an SPV, will be funded by internal sources, consortium members' equity and debt financing. OUE add that F&N’s property portfolio would be highly complementary to OUE's existing property portfolio. Kirin has irrevocably undertaken to accept the OUE consortium's offer, subject to its becoming unconditional, among various things. Kirin bought the bulk of its F&N stake in 2010 at $6.50 per share. Kirin has also undertaken to make a $2.7b cash offer for the food-and- beverage business of the F&N group, if the consortium's bid is successful. Nomura note that Kirin's interests are best served with OUE controlling (F&N), because OUE is not interested in the F&B businesses, whereas Thai- Bev is. The Thais now have the options of raising their offer price, walking away from the takeover by letting the offer lapse, or accepting the consortium's offer. Their current offer - already extended twice previously - lapses on Nov 22. The latest that this offer can be extended to is Nov 27. Nomura believes that TCC is likely to counter offer as it will want to defend its interest in the group. House maintains Buy rating for the shares.