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Fraser & Neave to snap up another 5.4% of Vinamilk

$500m move reflects parent Thai Beverage's thirst for foreign revenue

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Vinamilk products at a supermarket in Hanoi   © Reuters

SINGAPORE -- Beverage group Fraser & Neave is poised to pay about $500 million for an additional 5.4% stake in Vietnam Dairy Products, better known as Vinamilk.

If successful, the bid would increase F&N's interest in Vietnam's biggest dairy product company to 16.35%, from 10.95%. The plan underscores the international ambitions of F&N's parent, Thai Beverage, a conglomerate controlled by Thai billionaire Charoen Sirivadhanabhakdi.

The Singapore-based F&N on Wednesday filed notices at the Ho Chi Minh Stock Exchange, announcing that two wholly owned subsidiaries are bidding for a pair of 2.7% stakes in Vinamilk. F&N was the first to respond to a call for bids from the Vietnamese government, which is pushing a privatization plan.

The government, which owns 45% of Vinamilk, aims to sell a 9% slice through an international auction next Monday. The government set the upper limit for each company's purchase this time at 2.7%. The starting price is 144,000 dong per share, meaning a 5.4% stake would cost F&N at least $499 million.

"F&N aspires to be a leading food and beverage company in the region and Vietnam plays a pivotal role in that strategy," said Jennifer Yu, head of F&N Investor Relations. "Should the opportunity to increase our interest in Vinamilk arise in the future, the group will evaluate the merits of that opportunity," she added.

It has been rumored that Thai Beverage, which owns 28% of F&N, is interested in acquiring the entire 45% share of Vinamilk owned by the Vietnamese government.

Thai Beverage chief executive Thapana Sirivadhanabhakdi said in late November that the conglomerate was eyeing stakes in not only Vinamilk but also Saigon Beer Alcohol Beverage Corp., or Sabeco, another Vietnamese state-owned enterprise. The two companies are among 12 state enterprises the government wants to divest from.

Thai Beverage has set a goal of increasing the revenue contribution of overseas operations to 50% by 2020, from about 20% at present. F&N divested from Myanmar Brewery last year, selling a 55% stake for $560 million.

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