In a seismic deal that sent ripples through the Thai business landscape, Gulf Energy Development (GULF) and InTouch Holdings (INTUCH) announced a historic merger on July 16, 2024. The boards of both companies approved the proposal,which will be put to a shareholder vote on October 3, 2024, with an expected completion by the second quarter of 2025.
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Deal of the Century? Valued at a staggering 260 billion baht, this merger is one of the largest in Thai history.
Why Merge? Both companies cite the need to simplify their shareholding structures and reduce redundancies in being publicly listed. The goal is to streamline operations, enhance management efficiency, and diversify beyond INTUCH’s telecom-centric portfolio (primarily through its stake in Advanced Info Service, or ADVANC). The new entity, NewCo,aims to become a leader in energy, infrastructure, and digital services.
Winners and Losers? INTUCH shareholders will receive NewCo shares at a 1:1.69335 ratio and a special dividend of 4.50 baht per share, totaling over 14 billion baht. GULF shareholders will receive NewCo shares at a 1:1.02974 ratio.
Impact on Shareholders INTUCH shareholders benefit from the special dividend and the potential for higher long-term returns from a diversified NewCo. However, some may face liquidity challenges if they receive odd lots (shares in amounts not divisible by the standard trading unit). GULF shareholders gain from a more stable and diversified NewCo but may see lower dividends due to potential policy changes.
The New Landscape NewCo is poised to become a regional powerhouse, with diverse interests in power generation, gas distribution, port management, telecommunications, and digital services. This merger marks a significant shift in the Thai business landscape, reflecting the growing importance of digital transformation and clean energy. However, risks remain,including potential impacts on shareholders, employees, and overall market liquidity.
NewCo’s Business Portfolio
- Energy, Infrastructure, and Utilities:
- Natural gas power plants in Thailand, Oman, and the USA
- Renewable energy projects (solar, wind, biomass, waste-to-energy, hydro)
- Gas distribution, LNG terminals, and gas trading
- Infrastructure projects (highways, ports, power distribution, cooling systems)
- Digital:
- Telecommunications infrastructure and smart technology through ADVANC
- Other digital ventures (satellite communications through THCOM, digital asset exchange, data centers, cloud services)
The Road Ahead While this merger represents a bold move towards a more diversified and resilient Thai economy, its long-term success hinges on careful execution and navigating the challenges that lie ahead.
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