Thai M&As to continue in 2017

Economy December 26, 2016 01:00

By SUCHEERA PINIJPARAKARN
THE NATION

4,896 Viewed

MERGERS AND acquisitions of domestic and overseas businesses by Thai conglomerates will continue in the New Year, especially acquisitions in Vietnam, according to deal-makers.



MERGERS AND acquisitions of domestic and overseas businesses by Thai conglomerates will continue in the New Year, especially acquisitions in Vietnam, according to deal-makers.

It is also expected that the leaders of M&A activities in 2017 will be the same cash-rich corporates as this year.

According to legal firm Weerawong, Chinnavat & Peangpanor, the maturity of the domestic market has been driving Thai conglomerates to look for growth opportunities abroad, especially in other growing Southeast Asian markets.

Normally, banks define an M&A deal as a transaction worth at least Bt3 billion. Based on this definition, the value of M&As, both domestic and overseas, by Thai companies this year exceeded Bt200 billion. The total value of M&As next year is expected to be about the same, according to Suthipat Serirat, first executive vice president and head of investment banking and capital markets at Siam Commercial Bank.

Beyond Asean, renewable energy will continue to be the focus of Thai corporates in the energy sector, he added.

Thapana Sirivadhanabhakdi, president and chief executive officer of Thai Beverage, said that in his view, two of the most significant share-purchase deals this year were in the food and beverage sector. They were Thai Union Group’s investment in Red Lobster Seafood, a US-based seafood restaurant chain, and the acquisition of US frozen-food producer Bellisio Foods Inc by Charoen Pokphand Foods.

“The two deals reflect that [these] Thai conglomerates have become truly global companies,” he said.

However, Suthipat said Thailand was unlikely to see a single M&A deal next year that was worth Bt200 billion, like Berli Jucker’s acquisition of Big C Supercenter this year. BJC acquired 98 per cent of the hypermarket company for US$5.8 billion (Bt208.5 billion) early in 2016.

Sittichai Mahaguna, head of investment banking business at Kasikornbank, agreed with Suthipat’s assessment, adding that those that would lead M&A activities next year would be the same giant companies that led the M&A spree this year, thanks to their massive cash flow.

The privatisation of state-owned enterprises by the Vietnamese government will be a trigger for outbound M&As by Thai corporates in 2017, Suthipat added.

Vietnam’s government has been offloading its stakes in the country’s biggest brewery and dairy firms. Thai tycoon Charoen Sirivadhanabhakdi is reported to interested in bidding for stakes in those companies.

Suthipat said he expected that M&A deals worth more than Bt3 billion would continue to be made by Thai tycoons and listed companies in the SET30.

Kasikorn Research Centre says M&As by Thai corporates in Asean have become more dynamic in the past two or three years. The value of outbound M&As between 2012 and 2015 climbed to 1.3 per cent of gross domestic product, equivalent to Bt175 billion, compared with 0.15 per cent of GDP equivalent to Bt60 billion in the 2009-11 period.