How ThaiBev could boost its credit profile from F&N spin-off

Focus is on leveraging revenue and cost synergies.

In a report, Moody's Investors Service says that Thai Beverage Public Company Ltd's (Baa3, stable) credit profile will benefit from Fraser & Neave's (F&N, unrated) proposal to spin off its property business.

F&N -- which is 28.61% owned by ThaiBev and 61.67% by TCC Assets -- will separate its real estate division from its core food & beverage business through a listing in November or December 2013.

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Moody's believes the spin-off will facilitate moves by ThaiBev to better leverage revenue and cost synergies with F&N's food & beverage business, while the latter -- in the absence of its property business -- can better focus on expanding.

Moody's further believes that the proposed spin-off shows that TCC Assets seeks to more closely integrate, where possible, the operations of ThaiBev and F&N.

"We believe the latest development shows that ThaiBev and TCC Assets seek to maximize synergies between ThaiBev and F&N's core businesses, including leveraging each other's regional distributional networks, product development capabilities, and portfolio of leading beverage brands," says Annalisa DiChiara, a Moody's Vice President and Senior Analyst.

"Given that TCC Assets has notified F&N that it will vote in favor of the spin-off and in view of senior management restructuring at F&N for the purposes of a more dedicated focus on growing the food & beverage business, we expect TCC Assets to continue supporting additional restructuring to most efficiently integrate the two companies' food & beverage businesses. This may even include their full consolidation over time," adds DiChiara.