Leading Thai corporates outline their M&A strategies

Corporate March 19, 2014 00:00

By Pichaya Changsorn
The Nation

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To build up its technological prowess, the Siam Cement Group has set a specific mergers-and-acquisitions target for foreign firms, the first Thai conglomerate to do so.

“Usually, it’s hard to set an M&A target since it also depends on the other firm if they are OK with us. However, we have begun to set our M&A target for technology firms,” Kan Trakulhoon, president and chief executive officer, said yesterday.
SCG spent a few hundred million baht to acquire a start-up recently, he said.
Years ago, it took a 25-per-cent stake in GTC Technology, a US company that has licensed a petrochemical technology to SCG.
“If you have technology, we’re ready to explore opportunities even if the business might not be matched to us,” Kan told a conference held by the Thailand Management Association.
Japanese researchers are SCG’s target to lure in PhDs to assist its research and development work.
SCG has also used collaboration and joint ventures to develop its technological capability.
M&A are also a priority of the group to expand in Asean, because greenfield expansion would be more difficult and take more time to accomplish in the region.
Aswin Techajareon-vikul, president and CEO of Berli Jucker, told the conference that the political crisis in Thailand had not affected the group’s business goals but it might need to accelerate its plans because of pressure from the local market.
“We’re not adjusting our target but we may need to work faster,” he said.
Over the last several years, BJC, controlled by liquor and property tycoon Charoen Sirivadhanabhakdi, has pursued several domestic and overseas M&A transactions including takeovers of Malaysian snack-foods producer Jacy Foods, Malaya Glass Products, Asia Books and Danone Dairy (Thailand).
During the last couple of years, BJC has paid a lot of attention to expanding the sales and distribution platform for Thai companies in Southeast Asia, particularly in Vietnam, where it has built up more than 200,000 distribution points that contribute as a strong base for promoting Thai goods in that country.
Although the US market may be getting more interest, Asean would regain its attractiveness and Thai companies should not miss the chance to exploit their geographical and historical closeness to build up their market base in the region.
Suvabha Charoenying, managing director of Thanachart Securities, said it was hard to predict how many M&A deals would be executed this year since it depends on many factors. The political uncertainty has not had a “deal off” effect on M&A plans though some deals may be postponed as investors have adopted a wait-and-see attitude.
Thanachart is assisting four to five M&A deals worth Bt30 billion, involving the entertainment, telecom, real-estate and financial industries.
Leading Thai companies including PTT, Banpu and SCG are expected to purse more M&A transactions. 
The strengthening of the yen has led to the acquisitions of some Thai financial and insurance firms by Japanese companies, while the recent digital-TV licence auction has influenced some deals in the media industry this year, including Dentsu’s acquisition of Workpoint Entertainment and the agreement between Post Publishing and TV Pool Group, Suvabha said.
Companies should consider issuing debentures to lock in their interest rates and financial costs, even though they could get bank loans with a lower interest charge now, since the current rates are artificially low because of the US Federal Reserves’ policy, she said.
Tevin Vongvanich, president and CEO of PTT Exploration and Production, said PTT Group had to be more cautious in considering domestic M&As, but the global market outlook seemed to be brighter. PTTEP, in particular, has to keep searching for opportunities abroad since there are limited petroleum resources to explore in the home country.