Grammy backing off?

Published on September 16, 2005 -Paiboon said to be mulling a limited Matichon stake; Grammy executive denies rumour

Paiboon Damrongchai-tham, chief of the Grammy Group, is reported to be considering a retreat from his hostile takeover bid for Matichon Plc following an unexpected social backlash which has threatened to turn into a full-scale GMM Gram-my boycott, sources said yesterday.

However, at 8pm, Sumeth Damrongchaitham, a director of GMM Grammy Plc, insisted that his group would not back off.

“Whatever happens, the deal still exists,” he said.

Yet, the sources said yesterday that the Paiboon camp had been in talks with Khanchai Boonpan, the founder of Matichon, over the possibility of striking a compromise.

Sources said the entertainment tycoon indicated that he would be willing to reduce his holdings in Matichon to about 20 per cent instead of going for a takeover bid to seek a 100-per-cent stake.

Paiboon’s apparent retreat indicates that he may have miscalculated, given the unexpected backlash from civic groups and press organisations that have come out strongly against the takeover bid, which they say threatens the independence of the prestigious publishing house.

Paiboon, through GMM Media Plc, created uproar in the media industry earlier this week when he announced his plan to take over both Matichon and Post Publishing in order to transform his GMM Grammy into a gigantic entertainment and media conglomerate overnight.

Without any advance warning to Khanchai, GMM Media spent Bt733.29 million to build up its stake in Matichon to 32.23 per cent in an apparent hostile takeover attempt.

It further announced its intention to make a public tender to take 100 per cent control of Matichon, the publisher of Matichon, Khao Sod, Prachachart Thurakij and a host of other publications.

At the same time, Paiboon has succeeded in raising his stake in Post Publishing Plc – the publisher of the Bangkok Post and Post Today – to 23.6 per cent in arm-twisting deals.

Some securities houses, such as United Securities, have issued reports suggesting that Grammy’s hostile takeover of Matichon might not succeed because it would lead to widespread disruption in the editorial operation of the publishing house.

In the end, Grammy might end up owning only facilities such as buildings or printing houses while the staff, who represent the true value of the company, might walk away en masse, they said.

In a TV programme yesterday morning, Phichien Kurathong, executive editor of Matichon, said that Matichon Plc’s supporters were now ready to buy any shares at market value, in a counter-bid against GMM Grammy.

“You don’t need to go to the other party. We’re now open to buy any shares, at the market price of the particular day the shares are offered,” he said.

Phichien did not reveal the source of the financing.

A source in the banking industry speculated that Krit Ratanarak, a major shareholder of Bank of Ayudhya, could be the financier of Khanchai’s share buy-back.

Krit has known the Matichon founder for a long time and he was among the original financiers when the newspaper was first set up.

However, Matichon quickly issued a statement to clarify further that it would tender offers for the shares in accordance with exchange regulations once it has secured a deal from financial institutions.

Phichien told the Nation TV Channel that Matichon had first learnt of a possible takeover about four months ago, but there was no confirmation. “We also considered them [GMM Grammy] a friend. Among our people was a man who knew them. So, it was a shock when we learnt about the takeover bid. It’s like they stabbed us in the back.”

He also said that following the announcement, Khanchai’s supporters had contacted GMM Grammy Group about a buy-back deal, but GMM Grammy declined the offer.