Due to an increase in operating costs and a decrease in gross margins, more merger-and-acquisition (M&A) deals are expected next year, said Kongkiat Opaswongkarn, chairman of the Federation of Thai Capital Market Organisations.

He said this year there had been 16 such deals worth Bt92 billion while 8,000 deals throughout the Asian region accounted for US$600 billion (Bt21.9 trillion).

Kongkiat, who is also the president of Asia Plus Securities, said Thai companies in all sectors were likely to adopt the M&A trend to increase their competitiveness.

The most significant indication that M&A deals would increase was the decrease in gross margins, he said. This indicated that running a business was tougher, resulting in severe personnel head-hunting. As a result, the cost of employment rose and the number of participants in a given industry also increased. Companies needed to adjust by seeking partners in order to gain an edge over competitors.

"There will be more M&A deals in the future, especially among listed companies. It's easier if both parties are listed companies as they are required to be transparent before listing on the bourse. The M&A trend is coming," said Kongkiat.

However, Kongkiat said M&A deals can be done quickly if obstacles like nominee and tender-offer laws are clear.

Kitipong Urapeepatanapong, Baker & McKenzie's expert on Thai M&A law, said the lack of clarity in tax regulations was the major obstacle when conducting an M&A deal. He suggested that Thai companies readjust their shareholding structure to support M&A.

Separately, Kongkiat commented that the Thai stock market will not be as exciting as this year, as a result of a series of factors including the Bank of Thailand's reserve-requirement measure. He said that although the measure was quickly withdrawn from stock-market activities, it had shaken investors' confidence. However, he added that investors shouldn't panic over long-term investments and should invest in good fundamental securities.

He said the central bank's measure will decrease inflow as investors are not confident in the Thai regulatory system. As a result, fund investments will slow.

Siriporn Chanjindamanee

 The Nation