A huge acquisition deal between two SET-listed companies -- Global Power Synergy Plc (GPSC) and Glow Group Plc (GLOW) -- is expected to reach a conclusion Monday, after early details were divulged recently.
GPSC is a power generation business unit arm of national oil and gas conglomerate PTT Plc, which aims to acquire 69.1% ownership in GLOW from France-based Engie.
The remaining 30.89% shares of GLOW are to be floated on the Stock Exchange of Thailand (SET).
According to reports, GPSC's parent firm, PTT, is considering a merger and acquisition of Engie's shares in GLOW but details of how much the deal will be worth has yet to be be revealed.
Last Friday, GLOW shares closed on the SET at 92 baht, up three baht. When calculated against Engie's stake of 1.01 billion shares, the deal would be worth 93.01 billion baht.
PTT's executives and spokespeople for Engie have yet to comment.
This deal is assumed to be done because one motivation is PTT's business plan. The firm projects consumption of energy by global oil users will gradually shift from fossil oils to electricity based on people's changing lifestyles, driven by electronic devices -- smart phones, tablets, personal computers, and electrical vehicles (EVs).
Tevin Vongvanich, PTT's chief executive, said earlier that disruptive technology in the energy sector will transform demand for high emission fuels and hasten a move to cleaner energy.
PTT decided to set up GPSC in 2013 by grouping its power utilities from its subsidiaries such as PTT Global Chemical (PTTGC), IRPC and Thai Oil (TOP), and then span off its power generation units into GPSC.
In May 2015, GPSC was listed on SET and set up as PTT's fifth core business, after PTTGC, TOP, IRPC and PTT Exploration and Production (PTTEP), which are all SET-listed companies.
Unfortunately, energy reserves that year were still plentiful, or above the 30% threshold, with reserves expected to last until 2024. As a result, no big power plants have been commissioned in the private sector lately, which has affected GPSC's fortunes, among other plant operators.
However, the state-owned Electricity Generating Authority of Thailand (EGAT) plans to develop four plants comprising two coal-fired plants in Krabi and Songkhla, and two gas-fired plants units whose licenses are held by Gulf Energy Development Plc (GULF) for a combined capacity of 5,200 megawatts (MW).
GULF has been granted independent power producer licences since 2013. However, flat domestic economic growth has delayed the intended start dates.
So the expansion capacity of the power generation business in Thailand is limited mainly to renewable power. However, policy makers early this year suspended purchases of power from renewable sources unless the power tariff is higher than purchases from fossil-based power at 2.44 baht per kilowatt-hour.
Meanwhile, the country's power reserves are likely to remain high because business operators are rushing to develop their own solar power rooftops to generate their own power and cut power bills.
As a result, mergers and acquisitions among power plant assets in Thailand are one of the few ways to expand the power business, other than entering development deals in Asean. But GLOW reports it is re-evaluating its strategic position in the Thai market. As far any deal with GPSC is concerned, no decision has been made.
GLOW generates and supplies electricity, steam, and clarified, demineralised and chilled water under 17 various licences with a total generating capacity of 3,207 MW of electricity, 1,206 tonnes per hour of steam, 5,482 cubic metres per hour of processed water and 3,400 refrigerated tonnes of chilled water. GPSC has a power generation capacity of almost 2,000 MW.