C.P. Group and Telenor Group have agreed to examine the formation of a new telecom-tech business that includes True and DTAC. With the assistance of its important sponsoring shareholders, the new firm will be a merger of equals, bringing the best of the two local companies together.
Telenor (TEL.OL) of Norway and Charoen Pokphand Group (CP Group) of Thailand have decided to combine their telecom divisions in Thailand in a deal worth 282.8 billion baht ($8.6 billion) to establish a new industry leader in Southeast Asia.
Telenor’s Total Access Communication (DTAC) (DTAC.BK) and CP Group’s True Corporation (TRUE.BK) would consolidate their businesses in the deal announced on Friday.
In regards to network efficiency, innovation, investment power, and employer brand, the new business will be a prominent telecoms service provider with the ability to push Thailand’s advanced digital technology agenda.
The firms’ statement pushed DTAC and True Corp shares up 10% and 11.5 percent, respectively, on Monday.
The Thai stock market index (.SETI) was up 0.3 percent.
Chief Executive Officer of C.P. Group and Chairman of the Board of True Corporation, Mr. Suphachai Chearavanont stated,
“We need to facilitate rapid and greater value-creation from the network, providing new technologies and innovations to clients.”
According to Mr. Suphachai this indicates that transforming Thai enterprises into technology-based businesses is a critical step in maintaining a competitive advantage over global competitors.
Telenor thinks that digitization and technological improvements would provide major potential throughout Asia in the next years and that the proposed merger will result in a firm with roughly 55 million users and pro forma revenue of around $6.9 billion in 2020.
If the deal goes through, it will be a merger of equals, with a conditional optional tender offer for DTAC and True accompanied by a merger of the two firms, according to the company.
According to the business, the per-share bid price for DTAC will be 47.76 Thai baht ($1.46), which is a 25 percent premium to the one-month volume-weighted standard value, and the bid price for True will be 5.09 baht ($0.1548), which is also a 25 percent premium to the one-month VWAP.
All DTAC and True investors will have the option to participate in the public offering or remain shareholders in the combined business, which will be listed on Thailand’s stock exchange. Over the next few years, the combined firm will face a difficult operational environment, and C.P. Group and Telenor Group acknowledge that not all shareholders will want to join them on this trip, which is why a cash option at an attractive premium is being provided. The parties involved hope to reach a deal by the first quarter of 2022.
True and DTAC’s current activities will continue to operate independently until the acquisition is completed. The acquisition is subject to applicable board and shareholder approvals, as well as usual regulatory approvals, and the parties realise that the transaction’s completion is uncertain.
According to the firms, Telenor and CP Group will aim for a one-third ownership share in the united entity.
Subject to regulatory approvals, the combined business would become the country’s market leader, with around 52 percent of subscribers, overtaking Advanced Info Service Pcl (AIS).