BANGKOK -- Gulf Energy Development, an up-and-coming Thai conglomerate known for its power generation business, on Monday proposed a buyout of InTouch Holdings, the largest shareholder of Advanced Info Service, the kingdom's largest mobile operator.
Gulf Energy, which held an 18.93% stake in InTouch as of Friday, plans to buy the rest of the telco's issued shares at 65 baht each. The Bangkok-based company will have to prepare 169 billion baht ($5.4 billion) to acquire the 2.6 billion shares.
InTouch, which is also the largest shareholder of satellite company Thaicom, was formerly known as Shin Corp.
The offer pushed up InTouch's share price. At the Stock Exchange of Thailand, a share of the telco holding company traded 63.75 baht, up 9% from Friday's closing.
Gulf Energy will be making an additional offer to acquire Advanced Info Service, or AIS, at 122.86 baht per share if the power generator's stake in InTouch reaches 50% through the tender offer. The offering is well below AIS' close on Friday of 168 baht. Gulf Energy will need roughly 220 billion baht to obtain all the issued shares of AIS. InTouch holds 40% of AIS.
"[InTouch] and [AIS] are decent companies and have the potential to generate cash flow for [Gulf Energy] since they are leaders in businesses relating to telecommunications infrastructure in Thailand, which will be beneficial to the growth and development of Thailand," the offer statement says.
Gulf Energy is owned by billionaire Sarath Ratnavadi, who since 2007 has been gaining stature in Thai business circles. Originally a power business, the company now runs motorways and an LNG terminal in Rayong Province.
Listing Gulf Energy in 2017 has pushed Sarath up the rich ladder. He owns assets with a net worth of $8.1 billion, making him the third-richest man in Thailand.
Gulf Energy said it will use its own working capital, as well as loans from commercial banks, to source the buyout.
Among InTouch's largest shareholders are Singtel Global Investment, the operating arm of Singapore's largest telco. The company's stake accounts 21% of InTouch. Another unit, Singtel Strategic Investments, holds 23% of AIS.
Thaksin Shinawatra, Shin Corp. founder and a former prime minister, sold the telco holding company to Singapore's sovereign wealth fund Temasek Holdings in 2006. The sale resulted in a public backlash, which grew into protests that led to a coup that same year. Thaksin now lives abroad in self-exile.
Sarath's buyout bid shows that the tycoon endeavors to put control of the kingdom's largest telco back in Thai hands.
Singtel, however, hinted that it is unwilling to sell its InTouch holdings. "Singtel views its stakes in [InTouch] and [AIS] as strategic investments and we believe in the long-term outlook of the businesses," the Singapore telco giant said in a written statement.
InTouch recorded total revenue of 15.68 billion baht, down 11%, and a net profit of 11.04 billion baht, down 0.3%, in 2020. Its total assets as of December were at 52.6 billion baht, and its total liabilities were at 8.4 billion baht.
When buying a listed entity in Thailand, a company must make a tender offer, if its stake would surpass 25% as a result of the bid. Gulf Energy, however, said that if InTouch becomes its wholly owned subsidiary it does not intend to make an offer to Thaicom, even though it would indirectly hold 41% of the satellite operator through InTouch.
Gulf Energy did not elaborate on why it would not make an offer for Thaicom but said it is in the preparation process of consulting with the Securities and Exchange Commission to request a waiver. If the waiver is not granted, the company says it would consider dropping the whole tender.