Telecom firms Total Access Communication Plc (DTAC) and True Corporation Plc have agreed to merge, to pursue new tech business and raise venture capital for startups.
The merger plan was approved by their respective executive boards on Friday and their decisions forwarded to the Stock Exchange of Thailand on Monday.
The two companies on Monday also signed a memorandum of understanding for an equal partnership to form a new merged firm to pursue tech business.
They said in their advice to the SET they will "explore the feasibility of, and carry out required steps to implement, the potential amalgamation" of the two listed companies.
The two companies had entered into a non-binding memorandum of understanding to study combining their businesses by way of an amalgamation.
They agreed to a swap ratio of one existing share in DTAC to 24.5 shares in the new firm, and one share in True to 2.4 shares.
They indicated the new company will apply to be listed on the SET.
The companies said that Citrine Global Company, a joint venture of Telenor Asia, the parent firm of DTAC, and Charoen Pokphand (CP) Holding, the parent firm of True, would make a conditional voluntary tender offer for all shares of the two firms - 5.09 baht per one share in True and 47.76 baht per one share in DTAC.
Norway's Telenor and CP issued a separate joint statement, that both True and DTAC will enter into equal partnership to form a new tech firm that will pursue new tech businesses, create a digital ecosystem and set up a fund to support startups.
During the transformation, DTAC and True will pursue business as usual.
True and DTAC will pursue due diligence with each other and follow through on steps required in line with the law.
Suphachai Chearavanont, chairman of the board of True and chief executive of CP, said the new firm will maintain the telecom business but will expand to new tech frontiers, such as artificial intelligence, cloud, internet of things, digital media solutions and smart devices.
The new firm will also raise venture capital to focus on local and foreign startups as well as have a plan to study space technology to incorporate into its business, he said.
"The transformation into a tech company responds to the Thailand 4.0 strategy to become a tech hub in the region," said Mr Suphachai.
Sigve Brekke, president and chief executive of Telenor, said, "We believe that the new company can take advantage of this digital shift to support Thailand's digital leadership role, by taking global technology advancements into attractive services and high-quality products."
Jorgen A Rostrup, executive vice president of Telenor Group and head of Telenor Asia, said the proposed transaction will advance the company's strategy to strengthen its presence in Asia, create value and support long-term market development in the region.
The new firm will raise venture capital funding with partners of US$100-200 million, to invest in promising digital startups, he said.