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F&N to dissolve board as Thai tycoon moves closer to control

By Eveline Danubrata

SINGAPORE (Reuters) - Fraser and Neave Ltd's (F&N) board of directors will step down after a takeover offer by Charoen Sirivadhanabhakdi closes next week, paving the way for the Thai billionaire to have a greater say in the Singapore company's future.

Thailand's third-richest man, who currently has no representation on F&N's board, is inching closer to taking over the 130-year-old property and drinks conglomerate in Southeast Asia's biggest acquisition, after amassing a 46.1 percent stake through TCC Assets Ltd and Thai Beverage PCL since July last year.

Charoen's offer for F&N shares that he does not already own, which values the Singapore conglomerate at S$13.75 billion ($11.2 billion), will turn unconditional if the Thais secure a stake of more than 50 percent.

"As clearly the largest shareholder of the company today, and probably a controlling shareholder of the company in a few days' time, it's not inappropriate for them to have that full flexibility and to want a clean slate, where they would want to move things forward," F&N Chairman Lee Hsien Yang said at a shareholders meeting on Tuesday.

Lee, the brother of Singapore's prime minister, oversaw a two-month bidding war between two tycoons that led to the takeover deal.

"My phone has been very busy," Lee told reporters on the sidelines of the meeting.

"He (Charoen) doesn't speak English or Mandarin, so communication with him is always through an interpreter," Lee said, when asked if he had spoken with the Thai baron directly over the phone.

Charoen, looking to unlock the value of F&N's drinks business, regional distribution networks and prime properties, had raised his offer to S$9.55 a share - 7.5 percent higher than his previous offer of S$8.88. The increase was aimed at fending off a rival bid from a group led by Stephen Riady's Singapore-listed property firm Overseas Union Enterprise Ltd .

The Overseas Union group decided not to raise its S$9.08-per-share offer, saying such a move was no longer attractive after recent measures taken by the Singapore government to cool the city-state's property market.

F&N shareholders have until February 4 to accept or reject Charoen's new offer. F&N directors who hold shares, including Lee, intend to sell their shares to the Thai tycoon, according to an F&N statement on Sunday.

"I have got to enjoy myself and have a rest," Lee said, when asked about his plans beyond F&N.

PACKED BALLROOM

In a fully-packed hotel ballroom in Singapore, nearly a dozen shareholders lobbed wide-ranging questions at the nine-member board headed by Lee.

Several of them expressed disappointment that an auction called by the Securities Industry Council (SIC) failed to get into full swing when the Overseas Union group bowed out on January 21, the first day of the sale.

The auction was triggered because neither bidder declared a final offer by a January 20 deadline set by the Singapore securities watchdog.

The SIC had stepped in after Charoen extended the deadline of his previous offer seven times and the Overseas Union group twice, testing the patience of investors.

"I was disappointed too that OUE Baytown, after extending on numerous occasions presumably with an interest to bid in due course, chose not to bid when the auction process was initiated," Lee said.

But Lee said Charoen had raised his offer before the auction, creating a "clear gap" with the Overseas Union group's S$9.08-per-share bid.

Lee told reporters on the sidelines that he only knew the Overseas Union group decided to pull out of the battle at 6 p.m. (1000 GMT) on January 21.

Two shareholders also said they were wondering how Charoen managed to acquire 93 million shares, or a "game-changing" 6.45 percent stake in F&N, at S$9.55 apiece over two days before the auction, as most shareholders would have held on to their shares until the auction ended.

"The 90 million shares were a very sizeable block. TCC's broker must be very effective in persuading shareholders to sell on the eve of the auction," one of the shareholders said.

($1 = 1.2281 Singapore dollars)

(Editing by Ryan Woo)

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