OUE-Led Group, Thais Battle for Control of Singapore's F& NPublished: Thursday, 15 Nov 2012 | 8:11 PM ET

A consortium led by Overseas Union Enterprise launched a S$13.1 billion ($10.7 billion) bid for Fraser and Neave (F& N), trumping a takeover offer from Thailand's third-richest man for the Singapore conglomerate.

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The consortium's counter bid sets the stage for a showdown between it and the Thais as it seeks to unlock value in the Singapore conglomerate, which owns a property portfolio worth more than S$8 billion, as well as a range of other businesses including popular soft drinks in Singapore and Malaysia.

The consortium is offering S$9.08 per share for F& N [FRNM.SI  9.28    0.15  (+1.64%)   ], OUE [OVES.SI  2.62    0.08  (+3.15%)   ] said in a statement on Thursday, beating the Thai offer of S$8.88 a share.

The new offer, made at a discount to F& N's last traded price of S$9.13, values the company in the middle of the S$11.9 billion-16.1 billion range estimated by F& N's independent financial adviser, JP Morgan.

" F& N is a Pan-Asian consumer group with strong standing in property, F and B (food and beverages), publishing and printing industries. Its property portfolio would be highly complementary to OUE's existing property portfolio," said Stephen Riady, executive chairman of OUE, in the statement.

" Combining both will further strengthen OUE as a leading property player in Singapore and expand our footprint in Singapore and regionally," he added.

Riady is the chairman of the Hong Kong-listed Lippo [0226.HK  3.29  ---  UNCH    ], which is in turn part of the Lippo Group. He is also the son of Mochtar Riady, the founder of Lippo Group.

Lippo Ltd, through its subsidiaries, has a majority stake in OUE, according to its 2011 annual report.

To bolster its chances of success, OUE has secured conditional support from Japan's Kirin Holdings, F& N's second-biggest shareholder with a stake of around 14.8 percent, OUE said.

Kirin will offer to buy F& N's food and beverage business for S$2.7 billion if the OUE group's bid is successful, the statement said. Kirin was not listed as part of the consortium in the statement.

The OUE-led consortium includes certain investment funds and accounts managed by Farallon Capital Management, L.L.C. and Noonday Global Management Ltd.

Credit Suisse, Bank of America Merrill Lynch and CIMB are the financial advisors to the group.

Showdown Looms

Jit Soon Lim, an analyst at Nomura, said the latest move by the OUE group is " very likely" to pressure the Thais to raise their offer.

If recent history is any guide, Thai billionaire Charoen Sirivadhanabhakdi is likely to put up a strong fight. Earlier this year, Charoen forced Dutch brewer Heineken to raise its offer to get control of Asia Pacific Breweries [APBB.SI  52.60  ---  UNCH    ], the maker of the popular Tiger Beer.

Charoen, through TCC Assets Ltd and Thai Beverage [TBEV.SI  0.405  ---  UNCH    ], made a $7.2 billion bid in September to buy shares of F& N that he did not already own, valuing the entire Singapore group at around S$12.8 billion.

The Thai group is F& N's biggest shareholder with a 33.6 percent stake, and can acquire another 2.8 percent from shareholders who accepted its offer. The Thai offer is conditional on the group obtaining majority control of F& N.

The Thai consortium has twice extended its offer from the original Oct. 29 deadline. The latest closing date is Nov. 22.