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F&N to buy Starbucks Thailand; injects S$115m in capital, guarantees up to US$272m

FRASER and Neave (F&N) has made two capital injections totalling some S$114.8 million and provided guarantees of up to US$272.4 million, to facilitate its acquisition of the entire stake in Starbucks Coffee (Thailand) which is expected to be completed by the end of May.

The mainboard-listed drinks maker announced on Thursday that it had, through Coffee Concepts (Thailand) (CCT), agreed to acquire Starbucks Coffee (Thailand), which manages and operates Starbucks retail coffee stores in the South-east Asian country.

CCT is a joint venture between Maxim’s Caterers and F&N Retail Connection (FNRC), F&N’s Thai unit.

Maxim’s has been operating and developing Starbucks stores as a licensee of US-headquartered Starbucks Coffee Company since 2000. Maxim’s currently operates Starbucks stores in Singapore, Hong Kong, Macau, Vietnam and Cambodia.

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F&N said in a bourse filing on Friday that it injected S$76 million in further capital into its wholly owned subsidiary, InterF&B, in return for InterF&B to issue 7.6 million of its new shares to F&N.

F&N also injected some 893.3 million baht (S$38.8 million) into FNIH, in return for 89.3 million of new FNIH shares. FNIH is 49 per cent-owned by F&N and InterF&B, while Green Bean holds the other 51 per cent.

On Friday, F&N said it has also provided two guarantees - one at up to US$180 million and another with indemnity at up to US$92.4 million - to secure the obligations of CCT under the share purchase agreement (SPA) and HSBC facility agreement for the Starbucks Thailand acquisition.

The capital injections and provision of the guarantees constitute interested-person transactions, F&N said on Friday.

This is because Green Bean, FNIH, FNRC and CCT are associates of two individuals - Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi - who are both directors and controlling shareholders of F&N.

F&N does not need to get shareholders’ approval for the capital injections, guarantees and interested-person transactions, according to Listing Manual rules, it said on Friday.

The acquisition is earnings accretive and will be funded from a mix of debt and equity financing, the drinks maker said.

It is also expected to contribute positively to the group’s earnings in the current financial year ending Sept 30, 2019.

Bloomberg reported on Thursday that a transaction could value Starbucks’ operations in Thailand at more than US$500 million, according to people with knowledge of the matter.

With the acquisition, F&N said it plans to grow Starbucks Thailand’s “fast-expanding” footprint of 372 stores.

Fraser and Neave shares on Friday closed five Singapore cents higher than the previous day’s close, at S$1.78.