Lets think through the potential scenarios abit more systematically.

In my humble opinion, there are 2 broad scenarios and 6 sub-scenarios.

The 2 broad scenarios are 1) OUE consortium bids 2) OUE consortium does not bid

For 1) there are 2 sub-scenarios:

1.1)   TCC counter bids, leading to a bidding war between TCC and OUE, and resulting price of FNN will be at 10.5-11.5 depending on how intense the bidding war becomes

1.2) TCC does not counter bid, and OUE consortium gets to tender FNN. Likely price will be the mid point of fair value range provided by independent study commissioned by FNN plus a small premium to appease shareholders. So around 10-10.5

For 2) there are 4 sub-scenarios

2.1) TCC increases tender price to sweeten offer and get more shareholders to tender. Likely new tender price will be 9-9.5 range

2.2) TCC keeps current offers and the tender succeed as is. Price will come down to 8.88 in the near term.

2.3) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and a new bidder (maybe Suntory or OUE return or another consortium) comes to bid at a slight premium to offer price of TCC. Likely price will be in the 9-9.5 range

2.4) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and no new bidder comes along. Price will come down to 8.88.

From the above scenarios, 2.2) would be the best for TCC but at the same time given the strategic importance of FNN to THBEV’s expansion plans, going for 2.2) would be very risky in the sense of 2.3) happening.

So if OUE does not bid then 2.1) is very likely if shareholders of FNN hang tough and do not tender in their shares – TCC will be forced to increase their tender offer price to get over the 50% mark.

If OUE bids then 1.1) is most likely given that FNN is of strategic importance to THBEV.

If you have studied the business history of LIPPO and TCC, you will know that both have made aggressive bids for companies. So what we are seeing now is a situation where 2 samurais are staring at each other – the calm before the battle.

From the news, TCC is increasing the number of bank partnerships on the condition that those banks do not lend to the takeover bid by OUE. This is a smart move given that equity raising is likely more painful than OUE and getting enough partners may not be easy.

Let’s continue to monitor what happens. In any case, the risk return of FNN is very attractive now. Upside of 10-20% vs downside of 3-4%.

Lets think through the potential scenarios abit more systematically.

In my humble opinion, there are 2 broad scenarios and 6 sub-scenarios.

The 2 broad scenarios are 1) OUE consortium bids 2) OUE consortium does not bid

For 1) there are 2 sub-scenarios:

1.1)   TCC counter bids, leading to a bidding war between TCC and OUE, and resulting price of FNN will be at 10.5-11.5 depending on how intense the bidding war becomes

1.2) TCC does not counter bid, and OUE consortium gets to tender FNN. Likely price will be the mid point of fair value range provided by independent study commissioned by FNN plus a small premium to appease shareholders. So around 10-10.5

For 2) there are 4 sub-scenarios

2.1) TCC increases tender price to sweeten offer and get more shareholders to tender. Likely new tender price will be 9-9.5 range

2.2) TCC keeps current offers and the tender succeed as is. Price will come down to 8.88 in the near term.

2.3) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and a new bidder (maybe Suntory or OUE return or another consortium) comes to bid at a slight premium to offer price of TCC. Likely price will be in the 9-9.5 range

2.4) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and no new bidder comes along. Price will come down to 8.88.

From the above scenarios, 2.2) would be the best for TCC but at the same time given the strategic importance of FNN to THBEV’s expansion plans, going for 2.2) would be very risky in the sense of 2.3) happening.

So if OUE does not bid then 2.1) is very likely if shareholders of FNN hang tough and do not tender in their shares – TCC will be forced to increase their tender offer price to get over the 50% mark.

If OUE bids then 1.1) is most likely given that FNN is of strategic importance to THBEV.

If you have studied the business history of LIPPO and TCC, you will know that both have made aggressive bids for companies. So what we are seeing now is a situation where 2 samurais are staring at each other – the calm before the battle.

From the news, TCC is increasing the number of bank partnerships on the condition that those banks do not lend to the takeover bid by OUE. This is a smart move given that equity raising is likely more painful than OUE and getting enough partners may not be easy.

Let’s continue to monitor what happens. In any case, the risk return of FNN is very attractive now. Upside of 10-20% vs downside of 3-4%.

Lets think through the potential scenarios abit more systematically.

In my humble opinion, there are 2 broad scenarios and 6 sub-scenarios.

The 2 broad scenarios are 1) OUE consortium bids 2) OUE consortium does not bid

For 1) there are 2 sub-scenarios:

1.1)   TCC counter bids, leading to a bidding war between TCC and OUE, and resulting price of FNN will be at 10.5-11.5 depending on how intense the bidding war becomes

1.2) TCC does not counter bid, and OUE consortium gets to tender FNN. Likely price will be the mid point of fair value range provided by independent study commissioned by FNN plus a small premium to appease shareholders. So around 10-10.5

For 2) there are 4 sub-scenarios

2.1) TCC increases tender price to sweeten offer and get more shareholders to tender. Likely new tender price will be 9-9.5 range

2.2) TCC keeps current offers and the tender succeed as is. Price will come down to 8.88 in the near term.

2.3) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and a new bidder (maybe Suntory or OUE return or another consortium) comes to bid at a slight premium to offer price of TCC. Likely price will be in the 9-9.5 range

2.4) TCC keeps current offers and the tender fails, and TCC is legally barred from tendering for another year, and no new bidder comes along. Price will come down to 8.88.

From the above scenarios, 2.2) would be the best for TCC but at the same time given the strategic importance of FNN to THBEV’s expansion plans, going for 2.2) would be very risky in the sense of 2.3) happening.

So if OUE does not bid then 2.1) is very likely if shareholders of FNN hang tough and do not tender in their shares – TCC will be forced to increase their tender offer price to get over the 50% mark.

If OUE bids then 1.1) is most likely given that FNN is of strategic importance to THBEV.

If you have studied the business history of LIPPO and TCC, you will know that both have made aggressive bids for companies. So what we are seeing now is a situation where 2 samurais are staring at each other – the calm before the battle.

From the news, TCC is increasing the number of bank partnerships on the condition that those banks do not lend to the takeover bid by OUE. This is a smart move given that equity raising is likely more painful than OUE and getting enough partners may not be easy.

Let’s continue to monitor what happens. In any case, the risk return of FNN is very attractive now. Upside of 10-20% vs downside of 3-4%.