Gulf Energy Development Pcl, Thailand’s biggest power producer by market value, offered to acquire Intouch Holdings Pcl that control’s the nation’s largest mobile phone operator for as much as 169 billion baht (US$5.4 billion).

Intouch shares surged the most in more than two years.

The Bangkok-based company, controlled by billionaire Sarath Ratanavadi, offered to buy 2.6 billion shares, or about 81% of Intouch, that it doesn’t already own at 65 baht each, it said in an exchange filing. The offer price is 11% higher than Intouch’s close on Friday. While Intouch shares jumped 7.7% on Monday, the most at close since January 2019, Gulf Energy tumbled 1.5% to close at a five-month low.

Gulf Energy will also tender for 100% of Advanced Info Service Pcl, Thailand’s biggest mobile phone company controlled by Intouch, at 122.86 baht each. The Advanced Info offering will be subject to Gulf Energy securing at least 50% of Intouch, it said.

With the acquisition of Intouch, Gulf Energy may be targeting rising demand for 5G services as a new source of growth, according to Danai Tunyaphisitchai, an analyst at Phillip Securities (Thailand) Pcl. Still, the sell-off in Gulf Energy showed that some investors are concerned about possible large borrowing to finance the takeover, he said.

Sarath, 56, Thailand’s second-richest person, has expanded his 10-year-old energy company into deep-sea port, tollway and telecommunication businesses as well as power projects in Vietnam, Oman and Germany. Acquisitions of Intouch and Advanced Info will generate long-term benefits from their potential and cash flows as Thailand’s leading telecommunication companies, Gulf Energy said.

Satellites, E-commerce

“Intouch has a very strong business platform from mobile phones, satellites to e-commerce that can add value to our energy and infrastructure business,” Smith Banomyong, Gulf Energy’s chief of asset management and investment, told reporters. “Digital technology is considered another key infrastructure that all businesses require now.”

Gulf Energy’s proposed acquisition of Intouch would be Thailand’s third-biggest buyout deal, according to data compiled by Bloomberg. Singapore Telecommunications Ltd is the biggest shareholder of Intouch, after acquiring 21% stake from Temasek Holdings Pte in 2016, while Singtel also owns about 23% of Advanced Info, according to stock exchange data.

Singtel views its stakes in Intouch and Advanced Info as strategic investments and the company believes in the long term outlook of the business, it said in an exchange filing. The company is reviewing its strategic options to ensure that shareholders of Intouch and Advanced Info get full benefit of the intrinsic value of the businesses, Singtel said.

Bank Loans

Sarath, Gulf Energy’s chief executive officer, has a net worth of about US$9 billion, most of which comes from his and his family’s stake in the power producer, according to Bloomberg Billionaires Index.

Gulf Energy will finance the acquisitions of Intouch and Advanced Info from cash flow and bank loans, according to the company’s statement. The company has secured about 160 billion baht of loans to finance the purchase, Smith said. Shareholders will hold a meeting on June 25 to consider the proposed acquisitions.

Most of Intouch’s earnings come from Advanced Info and Thaicom Pcl, the nation’s biggest satellite operator. It also invests in technology startups. Gulf Energy will request the regulator to waive a mandatory requirement to make tender offer for Thaicom, it said.

Thaicom shares surged 9.2%, while Advanced Info rose 0.9% in Bangkok trading.

Source: Bloomberg