Bumper year for mergers and acquisitions
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Bumper year for mergers and acquisitions

Firms in several sectors expanded operations at home and overseas.

Esso buyout

Bangchak Corp completed its purchase of shares in Esso Thailand in October via a tender offer, valued at 3.54 billion baht, leading to 76.3% ownership of Esso Thailand.

Bangchak plans to change the name of Esso-owned petrol stations to Bangchak, starting in November.

The energy conglomerate wants to create synergy by combining its business with Esso Thailand and anticipates gaining an additional 3 billion baht from the move by 2025.

Earlier this year, Bangchak concluded the purchase of a 65.99% share in Esso Thailand, the operator of Esso petrol stations, from Esso Asia Holdings Pte for 22.6 billion baht.

The company also announced it would buy the remaining stake via a tender offer from investors in the stock market at 9.89 baht per share from early September to Oct 12.

Bangchak eventually bought an additional 10.31% share.

Chaiwat Kovavisarach, chief executive and president of Bangchak, said he is aware of the automotive industry's shift towards battery-powered cars, but he believes demand for oil will remain high for decades, leading the company to invest in the oil business.

Bangchak plans to change the name of Esso-owned petrol stations to Bangchak.

Under the synergy plan, Bangchak will focus on key issues such as economy of scale concerning back office operating expenses and simplified management, said Phatpuree Chinkulkitnivat, senior executive vice-president for accounting and finance.

This should help Bangchak reduce costs by 1.5 billion baht a year, according to Ms Phatpuree.

She said the company expects to gain an additional 1 billion baht from oil refinery improvements, new oil products, gross refinery margin optimisation and a coordinated maintenance schedule.

Bangchak will also earn 500 million baht from crude oil co-loading, the expansion of lower-cost logistics and growth in the value and volume of oil and non-oil trading, said Ms Phatpuree.

Between September and December, Bangchak aims to gain 625 million baht through the business synergy, rising next year until it reaches its goal of 3 billion baht in 2025.

3BB takeover

Advanced Info Service (AIS) completed its takeover this year of broadband internet service provider Triple T Broadband (TTTBB), known for its 3BB brand.

Mr Somchai expects AIS broadband service revenue to grow by 5-10% in 2024, following the takeover of TTTBB.

The deal makes AIS the market leader for fixed broadband. As of the third quarter, AIS had 2.38 million household subscribers, while TTTBB had 2.31 million, True Online 3.79 million and National Telecom 1.89 million.

As a result of the deal, the broadband internet market is set to become more rationalised through less intense competition, while the penetration rate (on a household basis) is expected to reach 80% in 3-5 years, compared with 50% at present, said Pisut Ngamvijitvong, senior equity research analyst at Kasikorn Securities (KS).

He said True Corporation should also benefit from market rationalisation.

According to an AIS filing with the Stock Exchange of Thailand on Nov 15, its wholly-owned subsidiary Advanced Wireless Network Co Ltd (AWN) completed its acquisition of TTTBB, while AIS completed its acquisition of investment units in Jasmine Broadband Internet Infrastructure Fund (JASIF), which is responsible for leasing internet networks to TTTBB.

As result, TTTBB is a subsidiary of AWN and AIS holds a 19% stake in JASIF.

The impact of the acquisition will be reflected in financial statements from the fourth quarter. The settlement value of the transaction was adjusted from the total value of 32.420 billion baht to 28.371 billion.

On Nov 13, AWN received a notification from the regulator approving its acquisition of TTTBB. AIS unveiled its plan to take over TTTBB in 2022.

AIS chief executive Somchai Lertsutiwong expects the company's broadband service revenue to grow 5-10% in 2024, following the takeover.

AIS and TTTBB will provide services separately through the AIS Fibre3 and 3BB Fibre3 brands, but they have begun synergy of some operations, he said.

AIS expects all IT backup and operations between the two companies to be seamlessly merged within two years, said Mr Somchai.

BCPG powers up in the US

BCPG Plc, the clean power generation arm of energy conglomerate Bangchak Corp Plc, made its first power footprint in the US this year by acquiring two gas-fired power plants for 3.9 billion baht in a move to gain stable revenue.

BCPG announced it bought a 40% share in Carroll County Energy Llc in Ohio, the US, in August.

The two power plants -- the 700-megawatt Carroll County Energy and 1,182M­W South Field Energy -- employ combined-cycle gas turbine technology, which uses both gas and steam turbines to produce electricity. The waste heat from the gas turbine can be used to generate extra power.

The power plants serve energy needs for US grid operator PJM around the clock, while the technology is environmentally friendly, said Niwat Adirek, president and chief executive of BCPG.

PJM is the largest regional transmission organisation in the US, coordinating the movement of wholesale electricity in 13 states in the US.

Investing in these two natural gas power plants aligns with BCPG's growth strategy, according to Mr Niwat.

The investment was made via a joint venture between BCPG USA, a BCPG subsidiary, and Advanced Power, a local developer and asset manager of independent power generation projects in the US.

In August, BCPG announced it had bought a 40% share in Carroll County Energy Llc.

The company, through its wholly-owned BCPG USA Inc, bought shares from 730 Carroll Llc, which holds a 100% stake in Carroll County Energy.

In early November, it announced the acquisition of an additional 8.7% share in Carroll County Energy. The share purchase was made through BCPG USA Inc.

The investment in Carroll County Energy is a good opportunity to gain stable revenue, said Mr Niwat.

BCPG has invested in four natural gas-fired power plants in the US. In addition to Carroll County Energy and South Field Energy, the company owns Hamilton Liberty Llc and Hamilton Patriot Llc in Pennsylvania.

Citigroup sell-off

Citigroup Inc agreed to sell its consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam to United Overseas Bank (UOB) Ltd for around S$4.9 billion (US$3.6 billion).

Citigroup Inc agreed to sell its consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam to UOB for around US$3.6 billion. (Photo: Patipat Janthong)

The transaction includes Citigroup's retail banking and credit card businesses in all four countries, excluding its institutional businesses.

Citigroup wanted to dispose of its retail banking operations in 13 different markets in Asia and Europe, focusing instead on building its burgeoning wealth management business.

The deal is UOB's biggest acquisition in two decades, doubling its retail customer base to 5.3 million in the four Southeast Asian markets, where it already has a substantial presence and competes with larger rivals, including DBS Group and Oversea-Chinese Banking Corporation (OCBC).

For the Thai market, Citi Thailand is still committed to serving institutional clients locally, regionally and globally, as it has for more than half a century.

UOB Thailand has been continuing with consumer banking operations, including Citigroup's unsecured and secured lending portfolios, wealth management and retail deposit businesses following the acquisition.

UOB Thailand wants to double its retail customer base in the Thai market over the next several years from 2.4 million clients after the acquisition.

Moreover, the income proportion of the retail banking business increased from 54% to 70% of the bank's total revenue following the acquisition.

With the asset acquisition, UOB Thailand is the country's leading credit card service provider, growing its core business.

For the first half of 2023, spending via UOB Thailand's plastic cards grew 15% year-on-year. While slower growth is expected in the second half of the year because of the high-base effect, the bank should post a double-digit expansion for the year.

UOB Thailand aims for spending growth of 15% in 2024, in line with the country's improving consumption following the pandemic, said Suporntip Pongsachamnankit, head of card business.

Selfridges control

Thailand's leading retailer Central Group took control of the historic British department store Selfridges after its Austrian partner Signa was beset by financial difficulties.

In the middle of November, Central converted a loan into equity, leading it to become the majority shareholder and gaining control of the joint venture firm operating companies within the Selfridges Group.

The move came after crisis-hit Signa said it faced restructuring following liquidity problems.

The transaction gives Central control over other department stores in the Selfridges Group, including Brown Thomas Arnotts in Ireland and De Bijenkorf in the Netherlands.

Selfridges, founded in 1908 by Harry Gordon Selfridge, is best known for the giant store on London's Oxford Street that has long been a magnet for fashion enthusiasts. It was owned for a long period by the Weston family of Canada.

A considerable portion of the value of Selfridges lies in its significant chunk of real estate in central London.

Central Group and its long-standing partner Signa bought Selfridges in 2021 in a deal estimated at £4 billion. The actual value of the deal was not disclosed.

Central Group, founded by the Chirathivat family in 1927, has grown to become a multinational conglomerate with a sprawling retail and property portfolio. The group operates the world's largest international department store network, spanning 120 locations across 80 cities in 11 countries.

The addition of Selfridges Group to its luxury department store collection makes Central the market leader for that segment in Europe, offering customers the best curation of brands and merchandise as well as extraordinary experiences, according to a statement from Central.

Additional reporting by Pitsinee Jitpleecheep

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