What does the sale of Frasel & Neave (F&N) tell you about corporate leadership and corporate value? Who were the key stakeholders and who was a loser in this deal?
The sale of Frasel & Neave (F&N) has been hailed as Southeast Asia's largest-ever acquisition. The key stakeholders in this takeover saga include Thai tycoon Charoen Sirivadhanabhakdi, who owns TCC Group and Thai Beverage (THBEV), Kirin Holdings Co., Japanese brewer, Asia’s largest beverage maker, Overseas Union Enterprise owned by Indonesia’s Riady empire and the directors of F&N who directly held shares in the company- Lee Hsien Yang, Timothy Chia Chee Ming, Tan Chong Meng and Nicky Tan Ng Kuang.
In the midst of acquisition, F&N has agreed to pay a break-up fee of as much as S$50 million to a consortium led by OUE if a competing offer is successful in an effort to entice the consortium to outbid Charoen.1 According to Section 34 of the Competition Act2, anti-competitive agreements that appreciably prevent, restrict or distort competition in Singapore are prohibited. By offering a break-up fee to OUE, F&N can be deemed as frustrating an existing offer, thereby distorting the dynamics of a free-market. Despite seeming to have gone against the spirit of the code, F&N said it agreed to the fee to “create a competitive bid situation, thereby maximizing value for shareholders.” 3
From the sale of F&N, it can be seen that corporate value is manipulative in nature in this profit-driven world. Stakeholders tend to gauge the value of the company based on its monetary worth. Corporate value steers the decisions of the leaders towards prevailing business circumstances and are not rooted in morality, ethics or philosophical convictions. In the case of F&N, the executives justify a breach of business ethics on the basis of financial profit, which was to offer a break-up fee to entice a higher bid. Also, with four of its nine-person board of directors holding shares directly in F&N, their...
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