ThaiBev Proposes $1.6B Frasers Share Swap in Bid to Boost Valuation

ThaiBev, the SGX-listed beverage and food giant founded by Thai billionaire Charoen Sirivadhanabhakdi, has agreed to transfer its stake in Frasers Property to a private vehicle controlled by Sirivadhanabhakdi, as part of a proposed share swap intended to boost the Singapore-based property developer and investor’s sliding valuation.

Under the terms of the conditional agreement announced on Thursday, ThaiBev will offload its entire 28.78 percent stake in Frasers Property to TCC Assets, a holding company owned by the Sirivadhanabhakdi family, while TCC Assets will transfer a 41.3 percent stake in SGX-listed food, beverage, and publishing conglomerate Fraser and Neave (F&N) to a unit of ThaiBev.

The swap, which amounts to a transaction value of S$2.1 billion ($1.6 billion), is an effort by Sirivadhanabhakdi to achieve a higher valuation for the property firm, which has seen its SGX-listed shares hover at all-time lows after having shed 55 percent of its value in the last five years. The swap price represents a 136 percent premium to Frasers’ closing share price on Wednesday.

“The Company is of the view that the low trading liquidity and current market prices of both F&N and FPL (Frasers Property) do not appropriately reflect the fair values of each business,” ThaiBev said in a filing to the Singapore Exchange.

NAV Discount

Upon completion, TCC Assets’ stake in Frasers will increase from 58.1 percent to 86.89 percent, while its interest in F&N will be reduced from 58.9 percent to 17.6 percent. At the same time, ThaiBev will cease to hold any interest in Frasers, while its stake in F&N will increase from 28.31 percent to 69.61 percent.

Based on a price of S$1.89 per Frasers Property share and S$3.55 per F&N share, the swap will be executed at a ratio of 1.88 Frasers Property shares for each F&N share, and will not involve any cash outlay. ThaiBev said the prices and swap ratio were backed by a “robust” valuation assessment undertaken by its financial adviser, Singapore-based DBS.

“F&N and FPL have historically traded at significant discounts to their respective net asset values,” ThaiBev said in the filing. “Given that market prices have limited reference value for purposes of evaluating the intrinsic values of F&N and FPL, the Company…proposed to TCCAL the possibility of approaching the Proposed Share Swap based on a negotiated price for each of F&N and FPL.”

DBS and ThaiBev utilised a net asset value (NAV)-based approach to determine the range of fair values for Frasers, which took into account the company’s most recent financials, the latest market values of Frasers’ stakes in listed REITs, as well as the value of its asset management platform based on precedent transactions using a price-to-earnings ratio of 18 times.

The valuation exercise also applied a discount of 20 percent to 25 percent to Frasers’ “revalued” NAV based on selected precedent privatisations of SGX-listed real estate companies by controlling shareholders, including last year’s privatisation of developer Chip Eng Seng by mainland investors Gordon and Celine Tang, CapitaLand’s take-private of its development business as part of a restructuring in 2021, and Wheelock’s buyout of its Singapore unit in 2018.

Other take-private transactions referenced in the valuation include Global Dragon Limited in 2023, Perennial Real Estate Holdings in 2020, United Engineers Limited in 2019, and LCD Global Investments in 2015.

“The negotiated prices of F&N and FPL are within the fair value range of each of F&N and FPL respectively, as determined by DBS, and in line with the relevant benchmarks as stated above, whilst allowing the Company to benefit from the strategic merits of the Proposed Share Swap,” ThaiBev said in the filing.

ThaiBev will be seeking shareholder approval for the transaction during a mid-September extraordinary general meeting, with the company targeting completion at the end of that month. The agreement provides for a long stop date of 31 March 2025.

News of a strategic review of Frasers had surfaced in January, after the Wall Street Journal reported that the property firm’s majority shareholders could sell some of its assets or the company outright. Sirivadhanabhakdi, who chairs Frasers, denied the report later that month.

Frasers had previously been a wholly owned subsidiary of F&N until its spinout and subsequent listing on the Singapore Exchange in 2014.

Profit Plunge

The proposed transaction comes after Frasers posted attributable net profit of S$35.8 million for the six months ended March, representing a 81.8 percent drop from the prior year, while revenue declined 20.4 percent over the same period to S$1.5 billion. The property giant had swung into the red in the six months ended September 2023 with a half-year loss of S$74.0 million.

The company attributed the profit plunge to unrealised fair value losses and impairments on UK commercial properties amounting to S$115.3 million, higher interest costs, and lower residential contributions in Singapore and Thailand.

“Continual market headwinds have created ongoing challenges for us, which are reflected in these results,” Frasers Property group CEO Panote Sirivadhanabhakdi, who is the youngest son of the elder Sirivadhanabhakdi, said in the company’s earnings announcement.

Frasers operates across five sectors, including logistics, retail, office and business parks, hospitality, and residential, with assets spanning Singapore, Australia, Europe and the UK, Southeast Asia, and China. The company had S$35.0 billion of property assets as of March.

Frasers’ shares closed on Thursday with a 2.5 percent gain after having initially climbed 8.8 percent earlier in the day. On a year-to-date basis, its shares have declined 8.9 percent, compared to a 7.0 percent gain for the Straits Times Index.