Counter surges on talk that Coca-Cola may be keen on Singapore beverage business

PETALING JAYA: Shares of Fraser & Neave Holdings Bhd (F&N Malaysia) rallied to a record high yesterday on market talks that Coca-Cola Co could be interested in the beverage business of the former's major shareholder, the Singapore-listed Fraser & Neave Ltd (F&N Singapore).

F&N Malaysia jumped 88 sen, or 4.6%, to close at RM20 on volume of 319,000 shares. The counter was also the top gainer of the day that saw Malaysia's stock market vacillating between gains and losses before closing in the positive territory, with the benchmark FTSE Bursa Malaysia KLCI advancing a marginal 0.98 of a point to 1,633.45.

Quoting unnamed sources, international news wire agency Bloomberg reported yesterday that Coca-Cola, the world's largest soft-drinks manufacturer, was exploring a bid for F&N Singapore's beverage business. The deal, it reported, could value F&N Singapore's beverage business, which included its dairy and soft-drinks operations that are held under F&N Foods Pte Ltd and F&N Malaysia, at US$3bil (RM9.39bil).

F&N Singapore has a diversified business model that includes food and beverage, brewery, property and publishing. It currently owns a direct stake of 56.32% in F&N Malaysia.

“Any structural change in its holding company will definitely have an effect on F&N Malaysia. But, as of now, everything's still fluid, it's just market talk', there's nothing substantive here,” an analyst with a local research firm told StarBiz.

A week ago, Bloomberg had also reported that Japan's Kirin Holdings Co Ltd was mulling a bid for F&N Singapore's beverage business. The wire agency based its report on information revealed by three unnamed sources, who, it said, had “knowledge” of the matter.

Kirin currently already owns a 14.96% direct stake in F&N Singapore. This makes Kirin the second largest shareholder in F&N Singapore, after Thai Beverage plc, which owns a 24.13% stake.

As it stands, no official comments pertaining to a possible bid for F&N Singapore's beverage business had been forthcoming from either F&N Singapore, Coca-Cola or Kirin side.

Meanwhile, in Singapore, trading in the shares of F&N Singapore and its partly-owned subsidiary, Asia Pacific Breweries Ltd (APB), was halted yesterday, pending an announcement.

F&N Singapore is to decide by today whether to accept Dutch brewer Heineken NV's offer to buy out its stake in APB, the producer of more than 40 beer brands, including Tiger and Heineken, in the Asia-Pacific region.

An analyst told StarBiz that the excitement surrounding F&N Singapore's upcoming decision on the APB stake sale could also be a factor that had led to the strong rally of F&N Malaysia shares yesterday.

To recap, Heineken had last month offered S$5.1bil (RM12.78bil) to buy out F&N Singapore's 39.7% stake in APB. The deal valued F&N Singapore's stake in APB at S$50 per share, which represented a premium of 1% to APB's last traded price of RM49.50 per share on Wednesday.

F&N Singapore's stake in APB came from a direct holding of 7.3% share, and an indirect holding of 32.4% share through Asia Pacific Investment Holdings Ltd (API).

API is a 50:50 joint venture between F&N Singapore and Heineken and controls 64.8% of APB.

Reuters, citing unnamed sources, reported that F&N Singapore had been pressing Heineken for a better offer for it to let go of its entire stake in APB, which was one of its crown jewels.

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