Heineken will fight for F&N's APB shares

Its counterbid will match or exceed Kindest Place's $55/share offer, predicts DBS.

Kindest Place Groups Limited (KPGL) made a S$55/share offer for FNN’s 7.3% direct stake in APB, which DBS sees as a “double-or-nothing” move seemingly to force Heineken to raise its offer for APB. This challenge will likely be met with a matching or higher counter-offer.

Here's more from DBS Vickers:

Kindest offer of S$55/share. Kindest Place Groups Limited (KPGL) has made an unsolicited offer to FNN for its directly owned 18.75m shares (c.7.3%) in APB for S$55/share (a 10% premium to Heineken’s offer price of S$50/share), equating to about S$1.03bn. KPGL currently has deemed interest of 8.6% stake in APB through an earlier transaction.

Edging for a higher counter-bid? We see this as a shrewd move, likely to force Heineken’s hand to raise its S$50/share offer. This seems like a “double-or-nothing” strategy by KPGL to maximize profits on its initial cost of investment for the 8.6% stake. If successful, this could reap S$222m for KPGL. Actions from Heineken? We envisage two options for Heineken: (1) raise their offer to match KPGL’s S$55/share; (2) do nothing and stick with their earlier S$50/share offer. The latter could result in parties related to Thai Bev ending with a majority direct and deemed interest, which in our view, is not a scenario Heineken would like to entertain. As such, we believe the former seems a more likely outcome.

While we expect FNN’s share price to see a positive knee jerk reaction to this latest development, we believe any new positions by investors should be taken more for speculative reasons, and for those who are willing to take a bet on how this saga unfolds, rather than from a fundamental perspective.