Fraser & Neave, Singapore“s biggest food and beverage concern, recently made its biggest – and most perplexing – thrust into the Internet: it launched a friendly bid for Times Publishing.
F&N said i…
Fraser & Neave, Singapore“s biggest food and beverage concern, recently made its biggest – and most perplexing – thrust into the Internet: it launched a friendly bid for Times Publishing. F&N said it would offer S$ 4.40 a share for the all the shares of Times Publishing it did not already own. The offer is 26% more than Times Publishing“s last traded price of S$ 3.50 and the highest price seen in more than a year. F&N said its “new strategic vision involves growth through new ventures in the knowledge-based industry”. It added that “the offer provides F&N with the opportunity to participate in the growth potential of a well-positioned company in a rapidly transforming knowledge-based industry”. F&N already owns 21.33% of Times Publishing. Its bid is conditional on securing acceptance to raise its stake to more than 50% at the close of the offer. Assuming full acceptance – a good possibility given the large premium – the exercise would cost F&N S$ 463 million. This would raise its investment in Times Pub to some S$ 570 million, a full 20% of its total shareholders“ funds. The deal is unlikely to go down well with investors given the size of the investment, the high offer price and the fact that Times Publishing has yet to launch any Internet venture. Some expect that the Singapore Exchange might ask for more information from F&N. “If the exchange is serious about promoting more disclosure from listed companies, I don“t see how it can let F&N get away with not saying more,” a broker said. F&N and Times Pub first came together in the mid-80s to launch the ill-fated Haw Par Villa project, which lost so much money that the owners are closing it down next March. F&N announced last December it bought 19.7% of Times Publishing for S$ 96 million. The market greeted the news by selling down F&N shares in a rising market. Now, F&N has raised the stake many times over by making a full bid for Times Pub, which it plans to use as its Internet vehicle. This is perplexing as S$ 463 million could buy F&N significant stakes in a dozen up-and-running Internet companies with proven products and established market shares. Instead, it is putting its bets on Times Publishing, which, if all goes well, will launch its first Internet venture in the near future. Called AsiaBuilders.com, it is meant to be a business-to-business portal for the construction industry. F&N recently talked about launching its own portal called Fannet Online to beef up its brick-and-mortar operations. Both F&N and Times Pub reportedly need some major ventures to bring them into the New Economy. F&N, a former regional bottler of Coca-Cola, has lost favour with investors after it sold off most of its Coke-related operations. Its other interests are held mostly by listed vehicles – beers by Asia Pacific Breweries and property by Centrepoint Properties – thus leaving F&N little more than a holding company with a minor dairy operation. Times Publishing has businesses in printing, publishing, directory information and a string of bookshops – all of which are facing mounting pressure from the Internet. Both F&N and Times Publishing are loosely connected to the OCBC Bank group, a relation which have shielded them from hostile bids in the past. But as local banks gradually dispose of their non-core assets – F&N bought its 19.7% stake of Times Publishing from OCBC – the two companies, which are trading well below their book value, suddenly look like takeover targets. The takeover of Times Publishing by a friendly party, F&N, has certainly removed the possibility of a hostile bid for the company. It could also make F&N, with the additional print and publishing businesses, less palatable to a takeover by regional food concerns.