Thai carpet maker TCM to buy Hong Kong firm

Thai carpet maker TCM to buy Hong Kong firm

Newly renamed group splashing out B3.14bn

From left Mark Robert Johnson, co-CEO for flooring business at TCM Corporation; Pimol Srivikorn, chairman of TCM; and William James Palmer, co-CEO for flooring business.
From left Mark Robert Johnson, co-CEO for flooring business at TCM Corporation; Pimol Srivikorn, chairman of TCM; and William James Palmer, co-CEO for flooring business.

Thailand Carpet Manufacturing Plc (TCMC) plans to spend 3.14 billion baht to acquire a commercial carpet business from Tai Ping Carpets International Ltd, a listed company on the Hong Kong stock market, as the Thai firm aims to become one of the world's leading carpet makers and sellers.

The deal is set to be sealed on Sept 29.

The company has also changed its name to TCM Corporation Plc and broadened its business to industries such as automotive and furniture.

TCM chairman Pimol Srivikorn said the company's board of directors held a meeting yesterday to seek approval for the acquisition of Tai Ping.

He said funding for the deal will come from Bangkok Bank through the issuance of debentures and warrants.

The commercial carpet business that TCM is acquiring from Tai Ping consists of Axminster and hand-woven rugs for sale to big projects such as hotels, casinos, convention centres, auditoriums and cruise liners, as well as carpet tiles for corporate offices.

The acquisition excludes luxury carpets.

Mr Pimol said the commercial carpet sales of Tai Ping average US$100 million (3.31 billion baht) a year, or 66% of total sales revenue. The remainder is from luxury carpets.

TCM was set up 50 years ago (as TCMC) under a joint venture with Tai Ping Carpets International Ltd of Hong Kong. Tai Ping later sold its stake in the company and set up its own factory in Thailand.

Mr Pimol said the acquisition will create synergy for each business of TCM, as the company will gain from future cooperation in customer base, distribution channels and raw materials, as well as declining production costs due to economies of scale.

The deal will bring Tai Ping Carpets International Ltd, which makes carpets in Thailand and distributes them in the US, Britain, Hong Kong, Singapore, Macau and India, under TCM's umbrella.

The total production capacity of Axminster carpets from TCM's factory in the Rangsit area and Tai Ping's factory in Pathum Thani will rise to 1.5-1.6 million square metres a year, up from 500,000 square metres.

"The deal marks the biggest acquisition by TCM in the past three years," Mr Pimol said.

Previously, the company spent £40 million (1.79 billion baht) to take over TCH Suminoe Co, a maker and supplier of non-woven carpets and fabrics for the automotive industry.

Other acquisition of the past three years included Alstons and DM Midlands, two well-known furniture brands in Britain.

After merging the businesses under one roof, TCM decided to promote Royal Thai and Carpets Inter, two Thai-owned brands for broader reach into the global market.

The company will stop using the Tai Ping brand, which TCM has licensed in Thailand for 50 years.

"This acquisition will prompt us to become one of the world's leading carpet manufacturers and distributors under our Royal Thai brand," Mr Pimol said.

The size of the worldwide carpet market is about $650 million. Of the total, $300 million is from the US, $200 million from Asia and $150 million from Europe.

After the acquisition, TCM will control 25-27% of the global carpet market.

Brintons of Britain is one of the world's largest carpet companies.

Sales of TCM are expected to jump to 10 billion baht next year, up from last year's 3.9 billion.

TCMC shares closed yesterday on the Stock Exchange of Thailand at four baht, up 12 satang, in trade worth 71 million baht.

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