Singapore group counters Thai bid for F&N SINGAPORE, November 16 - A group led by Singapore property company Overseas Union Enterprise launched a S$13.1bn ($10.7bn) bid for Fraser and Neave, challenging a takeover offer for the conglomerate from Thailand's third-richest man. The counterbid, if successful, could transform Overseas Union into Singapore's No.1 listed residential developer in the largest M&A deal in southeast Asia. The F&N board has yet to recommend the bid to shareholders, the biggest of which are groups linked to Thai billionaire Charoen Sirivadhanabhakdi including Thai Beverage and TCC Assets. Mr Charoen, looking to enlarge his property and beverage empire in southeast Asia, is likely to raise his S$8.88-a-share offer in response to the S$9.08-a-share bid announced by Overseas Union on Thursday night, analysts said. "OUE's offer is likely to be the first salvo in this fight," Jit Soon Lim, head of southeast Asian equity research at Nomura, said in a note to clients. TCC is likely to counter offer as it will want to defend its interest in the group. Mr Charoen is contending with one of the region's most powerful tycoons, Stephen Riady. Mr Riady is the chairman of Overseas Union as well as Hong Kong-listed Lippo, which owns a majority stake in the Singapore group through its subsidiaries. He is also the president of Indonesia's Lippo group of companies founded by his father Mochtar Riady. Overseas Union said on Thursday that it has secured conditional support from F&N's second-biggest shareholder Kirin Holdings to bolster its chances of victory. Kirin, which owns about 14.8 per cent of F&N, will offer to buy the conglomerate's food and beverage business if the consortium's bid was successful, according to Overseas Union. The Japanese brewer was not listed as part of the consortium. Overseas Union is bringing out the big guns to gain control of the 129-year-old F&N, which manages thousands of serviced resident apartments in cities such as London, Paris and Dubai. The conglomerate's S$8bn property portfolio also includes retail malls, office towers and high-tech business parks in Singapore, Australia and Japan. "All are good assets," Mr Riady said on the sidelines of a conference on philanthropy held by Credit Suisse at the National University of Singapore on Friday. They complement those owned by Overseas Union, he said. Credit Suisse and Bank of America Merrill Lynch are underwriting a bridge loan for the counterbid, sources with knowledge of the matter said, while CIMB is also providing some financial support to Overseas Union. The bridge loan will be about $8.5bn to $10.5bn in size, making it one of Asia's largest bridge financing deals, other sources familiar with the matter said, declining to be identified because they were not authorised to speak to the media on the subject. The bridge loan will have a 12-month maturity and the bulk of it will be repaid from the proceeds generated from the sale of F&N's beer, food and beverage businesses, the sources said. Dutch beer group Heineken agreed in September to buy F&N's stake in Tiger beer maker Asia Pacific Breweries for S$5.6bn. Overseas Union said Kirin has agreed to acquire F&N's food and beverage business for S$2.7bn if the counterbid was successful. The counterbid was placed by a consortium that includes investment funds and accounts managed by Farallon Capital Management and Noonday Global Management. "These guys are prepared for the long-drawn [battle] unless the Thais give a knockout offer," a source with direct knowledge of the matter said about Overseas Union's bidding strategy. Shares in Overseas Union rose 4.3 per cent in Singapore trading on Friday, while F&N advanced more than 2 per cent to S$9.33, indicating the stock market is expecting an even higher offer. Shares in Kirin declined 3 per cent in Tokyo. The S$9.08 counter-offer values the company near the middle of the S$11.9bn-S$16.1bn range estimated by F&N's independent financial adviser JPMorgan. In an unusual move, F&N agreed to pay a break fee of as much as S$50m to Overseas Union to create a competitive bidding environment to maximise value for shareholders, the Singapore conglomerate said on Friday. If recent history is any guide, Mr Charoen is likely to put up a strong fight. Earlier this year, the Thai billionaire forced Heineken to raise its offer to get control of APB. Mr Charoen, through TCC Assets and Thai Beverage, made a $7.2bn bid in September to purchase shares of F&N that he did not already own, valuing the Singapore conglomerate about S$12.8bn. The Thai group has a 33.6 per cent stake in F&N and can acquire another 2.8 per cent from shareholders who accepted its offer. The offer is conditional on the group obtaining majority control of F&N.