2 possible scenarios in F&N asset restructuring

Minority shareholders will decide.

According to CIMB, the concern that any restructuring of F&N’s assets may be done at ‘questionable’ values to the detriment of minorities is misplaced, in its view.

CIMB said the decision to keep F&N listed means that minority shareholders effectively hold the key to any proposed restructuring. Thai Bev and TCC, being related parties, cannot vote. This means that F&N’s assets will not be sold unless it is at a value deemed fair by minority shareholders.

How will they do it? CIMB notes to possible scenarios.

Here's more:

Restructuring will definitely happen. How or when it will be done is still uncertain. There is the possibility that it could drag until next year. Two possible scenarios are:

1) F&N sells the property arm to TCC. Our property analyst Donald Chua values the property assets at S$7.7bn. This is before applying any discount. TCC can pay for this stake by putting back its 61.7% stake in F&N worth S$8.5bn.

F&N becomes a pure F&B company and Thai Bev is left holding the majority of the shares. This paves the way for F&N to be Charoen’s regional F&B vehicle with the injection of Oishi and Serm Suk.

2) F&N sells the F&B business to Thai Bev. Kirin’s offer price for the F&B business was S$2.7bn while our estimate is S$2.8bn. Thai Bev can pay for this by putting back its 29% stake in F&N worth S$3.6bn.

This way Thai Bev no longer has property exposure and all its F&B interest is housed under one entity, which makes it easier to derive synergies.