The story dished up by the Business Times this morning in relation to Fraser & Neave is so full of holes, I am having trouble grasping why the paper even published it.

In essence, the BT story titled "F&N Gets Extra Shield With New Chairman In Place" says:

1. The board has fought off Heineken as a potential suitor
2. Some members of the board are congratulating themselves over this
3. The arrival of Lee Hsien Yang as Chairman – effective today – will "bolster its defenses"

If this story is actually true, shareholders should be extremely angry.

First, my blood boils when I read that F&N "has been bolstering its defences against a possible takeover bid by global brewing giant Heineken".

Hullo?!

It is the board's job to ensure shareholders get value for their investments. If this means accepting a well-priced takeover, so be it!

Second, the story says F&N "has been doing all it can to ensure that it remains a Singapore-owned entity." Where was this ill-placed sentimentality when Colony Capital bought the Raffles Hotel (arguably, an institution far more deserving of rescue from foreign hands than a soft-drink, beer and publishing company)?

Third, if Temasek really did invest because board member and celebrity accountant Nicky Tan brokered a S$900 mln investment, the question has to be asked whether Temasek is deviating from its often-stated philosophy of investing for purely commercial, and never political or parochial reasons. Further, it would be in shareholders' interests to know whether Mr Tan received a fee for his services, given that the company has an apparent predisposition to paying its board members extra consultancy fees.

Fourth, it cannot be true that "Mr Lee's appointment is just one of the moves it has made to stop [a Heineken takeover] from happening", because Mr Lee himself was at the buying-end of one of the most contentious takeovers of Australian corporate history. As SingTel chief he oversaw the purchase of Optus, which brought forth all sorts of concerns about Singaporean ownership and the potential for military information carried by Optus' satellites to fall into Singapore hands (that argument, incidentally, was just as ill-founded as supposed concerns that F&N would fall into foreign hands). Are we now to believe Mr Lee will argue black and blue against a Heineken takeover? If Mr Lee is worthy of his reputation – which I believe he is – he will argue in favour of a takeover bid by anyone who offers the right price.

Further, if Lee is the "extra shield" against a takeover (as the headline states), what was previous Chairman Michael Fam? A walk-over? Hardly, because no deal with Heineken was done.

There are other issues with this story.

First, it does not explain how – if at all – this has anything to do with the sudden departure of Chief Executive Dr Han Cheng Fong. Could it be that he alone argued in favour of letting Heineken make a bid?

Second, the story has no sources, other than a few references to comments made in other contexts by Dr Han and Heineken Chief Siep Hiemstra. How the paper then managed to conjure up phrases like "the story can now be told" (who did he get permission from?) and "Apparently, there was more to it" (according to whom?) is beyond me. At best, he has been sitting on this story for ten months (who is his responsibility to? BT readers or the board of F&N?). At worst, he is a pawn in someone else's game which is feeding the public a red herring for their own agenda.


Mark Laudi

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Labels: Business Times, Conrad Raj, F N, Fraser Neave, Han Cheng Fong, Lee Hsien Yang