Since the SEC’s take-over panel was created in 2003, over 50 cases requiring the buyers to tender for the target companies’ subsidiaries have been submitted to the panel, said the expert who spoke on condition of anonymity.

Not one case was approved and several buyers scrapped the deals as a result, he said.

The SEC is in the hot seat following the decision, which helps Temasek pay less to complete the acquisition as well as avoid a public backlash. Shin subsidiaries ShinSat and iTV, which both operate by concession, could be considered national assets that should not fall into foreign hands.

The watchdog was criticised for not pressing Shin to disclose more information while rumours swirled about a possible deal with Temasek.

The Stock Exchange of Thailand is in a similar position. Despite the likelihood that the deal was to be signed on Monday, it waited until 11am – an hour after the opening bell – before halting trading in shares of Shin and its listed companies.

Chalee Chantanayingyong, senior secretary-general of the SEC, defended the rulings, saying the Temasek-Shin deal is the first take-over case to fall under the “chain principle” category, which holds that in taking control of one listed company the buyer needs to tender for other listed companies.

Prior to the deal’s announcement, analysts estimated that Temasek would need to cough up US$7 billion (Bt275 billion) to buy out Shin and tender for its subsidiaries. However, the SEC granted an exception to Temasek, which now wants to make a tender offer for Advanced Info Service only.

“This is non-discriminatory. We’re really concerned about this as it concerns a company related to Prime Minister Thaksin Shinawatra. We needed to be sure that we proceeded on this with transparency and prudence. Making the resolution [involves] not only the SEC, but also the take-over panel,” Chalee said.

The panel of outside experts has the right to cross-examine the SEC on any resolution involving-share acquisition deals, he said.

Heading the panel now is Sompol Kiatphaibool, chairman of Siam City Bank and former permanent secretary of the Commerce Ministry.

Chalee insisted that the SEC’s resolution was consistent with the principles exercised by international markets. The panel based its decision on sales, net profit, total assets and market capitalisation of the subsidiaries. If the figures account for 50 per cent of those of the parent company, then tender offers are compulsory.

“The four factors of ShinSat and iTV account for only 5-18 per cent of Shin. So the tender offer could be waived,” he said, asserting that the 50-per-cent benchmark was first mentioned when the panel considered the Temasek-Shin deal.

The SEC also could not convince Temasek to propose a higher price for AIS shares, as the buyer insisted it was acquiring Shin, not AIS. Thus, the AIS tender price has to take into account the purchase price offered for Shin.

“We asked the Hong Kong exchange and it was confirmed that the tender for subsidiaries’ shares could be based on the purchase price for the parent company, instead of the market price. We had to give in,” Chalee said.

Business Reporters
The Nation