The boards of Thailand’s leading mobile carriers, Advanced Info Service (AIS) and Thaicom, have recommended that shareholders decline the tender offers presented as part of the proposed merger between their controlling entities, Gulf Energy Development and Intouch Holdings. This announcement was made on Thursday, sending ripples through the Thai telecommunications market.
The merger, announced in July 2024, aims to consolidate Gulf Energy, Thailand’s largest power producer and Thaicom’s major shareholder, with Intouch Holdings, the controlling entity of Advanced Info Service. The newly formed entity is projected to be valued at an impressive 1.037 trillion baht ($30 billion USD), creating a powerhouse in the Southeast Asian market. This ambitious merger is spearheaded by Thai billionaire Sarath Ratanavadi, Gulf Energy’s founder and Thailand’s fifth richest individual according to Forbes, with a net worth estimated at $15.1 billion USD.
Gulf Energy currently holds a 47.4% stake in Intouch, while Singapore Telecommunications (Singtel) maintains a significant 25% interest. Furthermore, Gulf Energy, Singtel, and Advanced Info Service have partnered in a joint venture to establish local data centers, slated to commence operations this year. The proposed merger has significant implications for this venture and the broader telecommunications landscape in Thailand.
The tender offer for Advanced Info Service, jointly submitted by Gulf Energy, Intouch, and Singtel, initially valued the company at 216.30 baht per share. However, this offer was subsequently revised downward to 211.43 baht. In response, Advanced Info Service’s financial advisor assessed the revised offer as undervaluing the company, placing its estimated worth between 229.55 baht and 285.70 baht per share. This discrepancy in valuation led to the board’s recommendation for shareholders to reject the offer.
Gulf Energy, in an email correspondence with Reuters, affirmed that the current tender offer price is final and will not be subject to further revisions. They also stated that the independent financial advisor’s recommendations will not impede the merger process. Meanwhile, Advanced Info Service shares closed at 290 baht apiece on Thursday, a 1.1% increase, further indicating market sentiment regarding the offer’s undervaluation. Singtel has also confirmed to Reuters that it has no intention of revising its offer.
Market analysts, such as Varorith Chirachon, head of investment research at SCB Asset Management, anticipated the boards’ recommendations. He noted that the current market prices of both Advanced Info Service and Thaicom exceed the tender offer prices, justifying the rejection. Chirachon further suggests that this development does not pose a substantial threat to the overall merger plan.
In parallel with the Advanced Info Service tender offer, a similar proposal was extended for Thaicom. Gulf Energy, Intouch, and Sarath Ratanavadi offered to acquire 58.9% of Thaicom at 11 baht per share. Thaicom attributed its recommendation for shareholder rejection to the consistent rise in its stock price since the initial merger announcement, with shares closing at 12.3 baht on Thursday.
The ongoing developments surrounding the merger of Gulf Energy and Intouch Holdings and the subsequent tender offers for Advanced Info Service and Thaicom signal a period of significant transformation within the Thai telecommunications sector. The final outcome remains uncertain, dependent on shareholder decisions and regulatory approvals. The strategic implications of this potential consolidation will continue to be closely monitored by investors and industry experts alike.
