(Oct 3): A surge in the stock prices of Thai billionaire Sarath Ratanavadi’s power company Gulf Energy Development Pcl and its telecoms affiliate Intouch Holdings Pcl may make it more challenging for the almost US$30 billion (RM126.48 billion) merger to get done.
Gulf Energy’s stock has climbed 34% since the deal was announced in July, giving the company a market value of US$20 billion. Intouch’s shares have jumped roughly 20% since then, valuing the firm at US$8.8 billion.
As shareholders vote on the deal on Thursday in Bangkok, Sarath is leaning against buying out minority investors who may oppose the combination of the two firms, people familiar with the matter said. Such a move could represent a major hurdle for the deal, the people said, asking not to be identified because the deliberations are private.
Sarath, who along with his family control a roughly 74% stake in Gulf Energy, would need to buy out those minority investors to be able to complete the deal. Under the country’s law, more than three quarters of shareholders in the meeting need to approve the deal and the biggest shareholder needs to purchase the shares from those dissented investors.
Sarath is Thailand’s richest person with a net worth of US$15.3 billion, according to the Bloomberg Billionaires Index.
Gulf Energy in July said it plans to combine with its telecom unit Intouch to simplify the group’s shareholding structure and maximise benefits for future operations and investments. A key condition for the deal to go through is that Sarath buys out those minority shareholders who vote against the merger at the market prices on Wednesday.
As part of the agreement, the billionaire has a right to withdraw from acquiring shares of Gulf Energy from dissented investors, if the share price on Oct 2 is higher than 45 baht. The shares closed at 56.50 baht on Wednesday, 26% above Sarath’s stated ceiling. For Intouch, Sarath has an option to cancel the offering if the company’s stock price is above 76 baht. The stock closed at 91 baht close on Wednesday.
Considerations are ongoing and no final decisions have been made, the people said.
Sarath referred a request for comment to Gulf Energy. Representatives for both Gulf Energy and Intouch didn’t immediately respond to requests seeking comment.
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