SECURITIES AND EXCHANGE COMMISSION: Hostile bid ‘shows good governance’

Published on September 20, 2005 - Though hostile takeovers go against the “friendly nature” of Thai culture, the relatively new practice demonstrates that the stock exchange has good governance to ensure retail investors are protected, the assistant secretary-general of the Securities and Exchange Commission said.

Chalee Chanthanayingyong said that while hostile takeovers were an aggressive way to acquire a company, they were not as bad as they look and could benefit minor shareholders by prompting management to pay more attention to their interests.

“The problem is that takeovers are new to Thailand and Thai culture is not totally open to them. Acquirers would also like to avoid getting involved in conflicts with existing management teams,” he said.

Chalee made his comments in the wake of GMM Media Plc’s bid to takeover Matichon Plc, which didn’t go as smoothly as the entertainment giant would have liked. GMM Media held 32.23 per cent of Matichon on September 12 and made a tender offer for the remaining shares in the publishing company. It sparked a public outcry amid speculation that company chief Paiboon Damrongchaitham was in making the bid in league with politicians.

GMM finally backed away from the deal, leaving Matichon founder Khanchai Boonpan to tender for all the remaining shares.

GMM’s hostile takeover was the first of its kind since the Stock Exchange of Thailand was established in 1974.

Before making investments, Chalee said, investors generally look at the takeover rules to find out if such practices are supportive to an investment.

“Without the rules, the exchange could not be considered as a standard one.”

The presence of hostile acquirers also provides an opportunity for minor shareholders in a target company to make a profit from the higher share price, which naturally rises as both sides try to take control, he said.

Siriporn Chanjindamanee
The Nation