Siamgas and Petrochemicals Plc (SGP), Thailand's second largest trader of liquefied petroleum gas (LPG) by volume, is continuing to emphasise its diversification into LPG cylinder production, with the latest 707.8-million-baht asset acquisition deal expected to make it better compete in the tough industry.
The company announced a takeover of Linh Gas Cylinder Co (LINH), a Bangkok-based LPG cylinder producer, buying a 97.5% share of LINH, according to SGP deputy managing director Jintana Kingkaew.
She said the new asset would bolster SGP's business opportunities, especially in overseas markets as LINH does not only sell its products domestically, but is also active in the export market.
LINH has a combined cylinder production capacity of almost 80,000 units per month.
Ms Jintana said the LPG business in Thailand is facing stiff competition, so the takeover deal would help SGP increase sales channel internationally. LINH exports its products to Bangladesh, India and the UK.
LINH also owns two plots of land, valued at 643.6 million baht, in Samut Prakan.
Ms Jintana said the land has the potential to be developed into new cylinder-manufacturing facilities to serve any requirement to expand its production capacity in the future.
"The pandemic enabled us to buy this asset at below the regular market price. This decision was made at the right time," said Ms Jintana.
After the deal, SGP will go on to draft a marketing plan for export this year. It may also consider doubling LINH's production capacity.
Earlier, SGP diversified into oil stock farms by purchasing a liquid tank farm and seaports in Koh Sichang, Chon Buri.
Ms Jintana said her firm acquired a 100% share in the business from Thai Public Port through its wholly-owned Siam LNG Co at a cost of 3.36 billion baht. This deal will make SGP the owner of oil tanks with a capacity of 345 million litres and four seaports.