The board of SET-listed Jay Mart, a major IT product distributor, has approved the issuance of 300 million new shares to BTS Group Holdings' two subsidiaries through a private placement in a deal worth 10 billion baht.
After the deal, VGI Plc and U City Plc, both subsidiaries of BTS, will hold 15% and 9% respectively of Jay Mart's total shares.
Jay Mart chief executive Adisak Sukumvitaya spoke to the Bangkok Post after the board meeting on Thursday.
The deal has to be approved at the shareholders' meeting in late October.
Jay Mart subsidiary JMT Network Services, which provides a bad debt collection service, plans to raise capital of 10 billion baht.
Some 5.4 billion baht will be raised by Jay Mart, which holds a 54% stake in JMT, while another 4.6 billion is expected to be raised by other shareholders.
U City plans to spend 8 billion baht to buy shares of Jay Mart subsidiary Singer, after which it would hold 24.9% in Singer.
Mr Adisak called this deal "super synergy" between BTS and Jay Mart, while some 30 billion baht is expected to flow into Jay Mart and its subsidiaries.
At present, Mr Adisak and his family hold a 46% stake in Jay Mart and the new deal would reduce their holding to 35%.
The two subsidiaries of BTS will hold a combined 24.9% stake in Jay Mart.
BTS Group Holdings engages in mass transit, media, property and services businesses, while Jay Mart has a core business in IT product distribution, but has expanded its foothold in personal loans, non-performing debt management, high purchase loans for electrical appliances and real estate development.
Pisut Ngamvijitvong, senior equity research analyst at Kasikorn Securities, said the deal is seen as creating business portfolio synergy for both BTS and Jay Mart.
The two companies have been diversifying themselves into areas where they add value to existing assets and fulfil their potential, he said.
Mr Pisut said BTS has diversified through investments in businesses focused on the digital economy, such as digital marketing, insurance, e-commerce and tech startups.
He said Jay Mart, which began life distributing handsets, has now expanded into several core businesses through its portfolio.
Jay Mart's share price climbed 75 satang to close at 35 baht in trade worth 1.4 billion baht on Thursday, while BTS's share price fell 5 satang to 9.25 baht in trade worth 206 million baht.
According to Bualuang Securities, BTS is expected to seek loans to finance its purchase of Jay Mart's shares, which may heighten financial costs for the former.
BTS may also look into capitalising on Jay Mart's digital tokens in its business ecosystem, Bualuang Securities said.
Sales of the newly issued shares can be used to fund other projects pursued by Jay Mart, including the personal loan business, operated by KBJ Capital, a joint venture between Jay Mart and South Korea's leading credit card operator KB Kookmin Card, said the brokerage.