The Stock Exchange of Thailand (SET) is requiring shareholders of CS Loxinfo Plc (CSL) to study information on the company's tender offer from Advanced Info Service Plc (AIS), as opinions differ between CSL's board of directors and an independent financial adviser (IFA).
A SET statement required CSL's shareholders to look at both the board's opinion and that of the IFA before deciding on the tender offer.
Advanced Wireless Network Co Ltd (AWN), a subsidiary of AIS, submitted an application for a conditional voluntary tender offer to CSL at a price of 7.80 baht per share in 2017.
The tender offer period falls between Dec 15, 2017 and Jan 22, 2018.
CSL submitted its board's opinion on the tender and the opinion of IV Global Securities Plc, the IFA, on Jan 9. The two opinions differ drastically.
CSL's board recommends the company's shareholders reject AIS's tender offer because the latter has a plan to delist CSL from the SET, a move that would affect existing shareholders in terms of securities trading flexibility. The board added that there is no reliable reference for the offering price.
Capital gains from the sale of CSL shares are also subject to personal income tax, and there could be a weakness in access to information.
On the other hand, IV Global Securities, CSL's IFA, said the company's shareholders should accept the tender offer because the offering price of 7.80 baht is higher than the company's fair value when assessed via a discounted cash flow approach, which indicates a range of 5.63-7.31 baht.
An acceptance of the tender offer may be an option to reduce risks arising in the future, such as delisting from the SET or a future offering price for CSL shares lower than the current one.
AIS is flexing its muscles in the fixed-line broadband sector as the country's largest mobile operator strives to shift to higher-margin businesses.
The deal, part of the group's internal restructuring efforts, will let AIS inherit the internet firm's management team, as well as consolidate CSL as a sales unit of AIS once the deal is settled, according to a source familiar with the matter.
An AIS report submitted to the SET last Sept 13 said AIS performed due diligence to acquire shares of CSL from two major shareholders: Thaicom Plc, which held 42.1% of CSL through its subsidiary DTV Service Co; and Singapore Telecommunication Ltd, which held a 14.1% stake.
According to a source on CSL's board, the difference in opinions between CSL's board of directors and the IFA is not significant, since the opinion of CSL's board came from three independent directors on the nine-member board.
All three independent directors come from a legal or academic background. It is normal practice to withhold support from any plan that could lead to the delisting of a company from the SET.
The remaining six directors abstained from giving their opinion, as they have a conflict of interest as major CSL shareholders.
The CSL board is now chaired by Wichian Mektrakarn, former chief executive of AIS.
The opinions from the three independent directors did not mention the price of the tender offer or the future of the business after the deal, the source said.
ADVANC shares (AIS) closed yesterday on the Stock Exchange of Thailand at 192 baht, unchanged, in heavy trade worth 1.77 billion baht.
CSL closed on the SET at 7.75 baht, unchanged, in trade worth 17.6 million baht.