Is Fraser and Neave (F&N) a value trap?
And so the dust has finally settled for Singapore’s iconic Fraser and Neave (F&N). Following the explosive takeover saga in 2012, share price languished at $2.20 level since. In the aftermath of the corporate drama, is F&N currently a value trap?
For a 135 years old company, Fraser and Neave (F&N) limited should be a household name to many Singaporeans. But understanding this venerable SGX-listed company is not an easy feat as corporate events unfolded between 2008 and 2013 transformed its destiny forever.
The takeover saga
On looking back, the appointment of Lee Hsien Yang as Chairman in 2008 must have heralded great things for F&N. Lee Hsien Yang had at that point of time, left SingTel as CEO and joined F&N as Chairman, overseeing the divestment of the Asia Pacific Breweries (APB) and the takeover of F&N by Thailand tycoon, Charoen Sirivadhanabhakdi, founder of Thai Beverage (ThaiBev).
As Chairman of F&N, Lee Hsien Yang unlocked much value for F&N investors. After the takeover battle, there were two capital reduction exercises which saw shareholders receiving a total of $3.70 per share. Then the listing of Frasers Centrepoint (FCL) saw F&N distributing two FCL shares for one F&N share (without any cash outlay). During the period from 2008 to 2013, share price of F&N surged from $1.90 to $9.73.
In light of the above, investors of F&N must surely worship Lee Hsien Yang for creating so much wealth for them. And indeed, Lee had delivered.
From Singapore’s Temasek Holdings and OCBC Bank, to Thailand’s ThaiBev, to Indonesia’s Riady family, to Holland’s Heineken and Japan’s Kirin Holdings. Global big boys had a hand in shaping the course of F&N history. Why is it important to understand the powerful forces behind the scene and the history of this company?
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