The Canadian bank (formerly Bank of Nova Scotia) will buy 157.13 million shares from Thanachart Capital, Thanachart Bank's parent, and 276.26 million newly issued shares at a price of Bt16.37 each, well above the market price of Bt9.50 before stock trading suspension on Wednesday.

The deal will have a value of Bt7.1 billion.

Under the agreement, Scotiabank is allowed to buy additional shares of up to 49 per cent in Thanachart Bank at the same price as the first instalment by the end of this year and it is subject to a one-year extension and further call for rights for four years.

Thanachart Capital chairman Banterng Tantivit told reporters at a press conference yesterday that the selling price for Thanachart Bank's stake up to 49 per cent was based on 1.6 times Thanachart Bank's book value.

He said that Thanachart Capital would maintain its minimum stake in Thanachart Bank at 51 per cent.

After the 24.99-per cent stake is sold to Scotiabank, Thanachart Capital will launch a tender offer for the remaining shares of Thanachart Bank at Bt16.37 apiece to delist the bank's securities from the stock market, he said.

Thanachart Capital holds 99.36 per cent of Thanachart Bank.

If the 24.99-per cent acquisition deal goes through, three representatives from Scotiabank will join the Thai bank's board of directors and the number will be raised to five if the Canadian bank holds 49 per cent, he said.

Thanachart Bank's board of directors now has 10 members.

The Thai bank will maintain its focus on auto loans following the deal, Banterng said.

Assets of around Bt4 billion in Thailand and 32 Scotiabank staff will be transferred to Thanachart Bank. In addition, Thanachart Capital will transfer all shareholdings in its subsidiaries and affiliates with the exception of Max Asset Management to Thanachart Bank.

"Scotiabank will support the bank in terms of auto loans, corporate and retail lending, treasury and trade finance," said Banterng.

Rob Pitfield, Scotiabank's executive vice-president for international banking, said that the buying price was reasonable, based on potential growth for both Thailand and Thanachart Bank.

"We are not concerned much about political uncertainty at the moment as we are committed to long-term investment in Thailand," he said.

Scotiabank president and CEO Rich Waugh added: "This agreement provides for the acquisition of a significant stake in Thanachart Bank, demonstrating our commitment to finding opportunities to drive revenue growth."

With Bt257.47 billion in assets and about 6,000 employees, Thanachart Bank has the fastest-growing branch network among the top 10 banks in Thailand, with 142 branches and 260 ATMs.

It is also the leading auto lender with a 24-per-cent market share.

Somruedi Banchongduang

The Nation