SCC seals packaging expansion
Siam Cement Group (SCC) subsidiary Thai Containers Group has reached an agreement to acquire paper-packaging operations in Singapore and Selangor, Malaysia, from Sime Darby Group and Rengo.
The Bt320-million deal will increase the group's packaging capacity by 50,000 tonnes a year, SCC said in a statement to the Stock Exchange of Thailand. Sime Darby is Malaysia's leading conglomerate, with core businesses in plantation, property, heavy equipment, motors, energy and utilities. Rengo is Japan's leading packaging company. Thai Containers Group is a 70:30 joint venture between SCG Paper and Rengo. SCC said the paper-packaging industries in Malaysia and Singapore had continued to grow in line with economic expansion, with current demand of one million tonnes a year. The conducive business environment has attracted multinational companies to set up manufacturing bases, particularly in electronics and electrical appliances, food and beverages and other consumer products, leading to strong demand for packaging. "With a leading market position in Thailand, Thai Containers Group currently operates eight box plants nationwide, having a combined capacity of 500,000 tonnes a year. It plans to expand its packaging capacity in the domestic market and overseas to capture the strong demand for paper packaging," said SCC president Kan Trakulhoon. SCG Paper has exported approximately 90,000 tonnes of packaging paper to Malaysia and Singapore. The deal will allow SCG Paper to strengthen its market position in these two countries, being more competitive to serve diversified customer bases with value-added products. SCG Paper has plants in the Philippines and Vietnam. SCC as a whole is being aggressive in expanding its business into other countries in Asean. Domestically, SCG Paper is strengthening its operations by tendering for the remaining shares of Thai Cane Paper before delisting the subsidiary from the Stock Exchange of Thailand. SCG Paper offers to buy Thai Cane shares at Bt14.60 apiece. Yesterday, Advisory Plus, the independent adviser for Thai Cane shareholders, suggested they sell their shares to SCG to avoid liquidity problems after the delisting. However, it said the tender price was inappropriate against the present value of Bt15.13 to Bt16.83 per share based on future free cash flow. Shareholders who decide to hold the shares will not be exempt from capital gains tax but should enjoy other benefits as Thai Cane's business policies would not be changed following the tender offer, the adviser said in a statement to the exchange.
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