TMB Bank's newly issued shares to be earmarked for existing shareholders are initially set at 2.17 baht each, but the final price will hinge on the outcome of due diligence.
The bank's existing shareholders, including the Finance Ministry, will be allocated one new share for every 15 shares held, said Prasong Poontaneat, the finance permanent secretary.
Under the mutual agreement, TMB's existing shareholders will be sold newly issued shares at a lower price than those to be allotted to Thanachart Bank (TBank) shareholders, he said.
The 2.17-baht figure is above TMB's closing price of 2.14 baht after it fell 10 satang on Tuesday.
TMB recently signed a non-binding memorandum of understanding to consolidate with TBank through an entire business transfer with an estimated transaction value of 130-140 billion baht.
TMB plans to finance the transaction via a combination of debt and equity financing. Equity financing is expected to account for 70% of the transaction value.
As part of the equity financing, TMB will allocate newly issued shares worth 50-55 billion baht to Thanachart Capital (TCAP) and Bank of Nova Scotia (Scotiabank) and the remaining 40-45 billion baht in newly issued shares will be allotted to the bank's major shareholders.
The amalgamation is expected to be completed by year-end. Once finished, the merger will result in combined assets worth 1.9 trillion baht, making it the sixth-largest bank by assets in the commercial bank sector.
According to the major shareholder structure of both banks, the Finance Ministry holds a 25.9% stake in TMB and Dutch bank ING has a 25% stake.
TCAP holds a 51% stake in TBank and Scotiabank owns the remainder.
Finance Minister Apisak Tantivorawong said recently that buying TMB's rights offering shares is estimated to cut the ministry's investment cost in the bank to about three baht a share from 3.80 baht.
Mr Prasong said the ministry will inject fresh funds worth 10 billion baht to subscribe to TMB's newly issued shares, keeping its shareholding in the new bank at the same level as its stake in TMB, or up to one percentage point lower.
A source at TMB said the ministry will be the second- or third-largest shareholder in the consolidated bank, while ING will be the biggest.
But the new bank's chairmanship position will be allocated to the ministry, while ING will take responsibility for management tasks, the source said.
Although there is a deal to offer newly issued shares to TMB's existing shareholders at a discounted price, due diligence results will determine the final price, the source said. Due diligence is not expected to be complete before the general election.
The ministry wants to sell its stake in the Vayupak Fund and use the annual budget to fund buying TMB's newly issued shares, but the next government must finalise the funding source for the deal, the source said.