By Kimberley Kao
Thai billionaire Sarath Ratanavadi is merging power producer Gulf Energy Development with telecom Intouch Holdings, creating an energy and communications powerhouse that will be one of Thailand's largest listed companies.
Gulf Energy and Intouch said late Tuesday that the deal would result in the dissolution of both companies and the creation of a new entity with registered capital of 14.94 billion baht (US$415 million).
Gulf Energy, owned by Ratanavadi, is Intouch's largest shareholder, with a roughly 47% stake. The companies currently have market capitalizations equivalent to roughly US$14.2 billion and US$6.6 billion, respectively.
The restructuring includes making tender offers for securities of Intouch unit Advanced Info Service, one of Thailand's largest mobile phone operators, and for Gulf Energy unit Thaicom, a satellite operator.
Gulf Energy said the deal would help simplify the companies' current shareholding structures and reduce "the repetitious presence" of listed businesses on the local exchange.
Singapore Telecommunications, which has a 25% stake in Intouch, said separately it would receive a roughly 9% stake in the new Thai company and book an estimated gain of 400 million Singapore dollars (US$297.6 million) on the deal. It said it backed the deal and expected the new company to become "one of the largest and most liquid listed companies in Thailand."
Singtel also said it would take part in the tender offer for AIS shares, and that there was no intention to privatize the unit.
Shares of Gulf Energy were up 4.1% in afternoon trading in Thailand on Wednesday, while Intouch shares were down 2.6%. AIS and Thaicom were 2.7% and 4.5% higher, respectively.
In Singapore trading, Singtel shares rose 1.6%.
Citi research analysts Arthur Pineda and Luis Hilado said the deal looks like a better monetization opportunity for Singtel than its initial stake in Intouch should it one day choose to sell its 9% stake in the new company. This would offset the absence of Intouch's equity contributions, they said.
DBS analysts estimated that Singtel's stake could be worth between S$1.5 billion and S$1.8 billion.
Given that the new Thai company "is not a telecom or data center business strictly... Singtel should be open to sell" the stake in one to three years to meet its divestment target of S$6 billion, DBS research analysts said in a note. They described the restructuring as a good "medium-term strategic move" and kept their buy rating on Singtel shares with a target price of S$3.50.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
July 17, 2024 04:53 ET (08:53 GMT)
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