M&As by Thai firms touch $5.6b driven by outbound transactions in Asean

Value of mergers and acquisitions by Thailand companies in the Asean region touched 200 billion baht ($5.62 billion) in 2012-15, driven largely by outbound transactions, according to a research by Kasikornbank (KBANK), one of the country’s top banks.

Chongrak Rattanapian, Executive Vice President, said, Thai companies made more outbound M&A to boost their competitiveness in the Asia Pacific region.

“The value of outbound M&A accounted for 0.15 per cent of the country’s GDP, equivalent to 60 billion baht ($1.69 billion), during 2009-11. It increased to 1.3 per cent, equivalent to more than 175 billion baht ($4.92 billion), during 2012-15,” he told media.

The report says Thai companies will continue to look for outbound deal opportunities particularly in the Cambodia, Laos, Myanmar and Vietnam (CLMV) region given the growth predictions in these countries.

“CLMV has a remarkable growth. Their GDP is believed to expand 7 per cent, while Thailand is only 3.2-3.6 per cent. Therefore, we believe Thai companies will explore more opportunities for M&A in these countries particularly in the consumer products and hospitality businesses,” Chongrak explained.

Consumer spending in these countries is expected to increase from 6.3 trillion baht ($177 billion) in 2013 to 8.05 trillion baht ($226.12 billion) in 2020.

Outside ASEAN, most Thai firms struck deals in energy, petrochemical and hotel sectors.

Domestic M&As were driven by a need for consolidation given the macroeconomic slowdown in the country. Thailand recorded several such deals in property, food and beverages, chemicals, healthcare and beauty businesses.

He said, “this trend will continue until next year.” This is because the M&As are taking place among unlisted firms who find it hard to raise money from the stock market and also access debt as banks tighten loan approvals.

The research stated that overseas firms closed 230 M&A deals in Thailand valued at 650 billion baht ($18.3 billion), in the last five years. Most of the firms were from Japan, China, Singapore and Malaysia. The businesses that attracted them were logistics, tourism and services, but the highest transaction value were from banks, insurances and telecommunication.

For the value of M&A globally, it is predicted to increase by 19 per cent per year during 2015-18, mainly driven by pharmaceutical and health, transportation and technology-based business. In Asia, it is expected to surge 23 per cent per year during the same period, up from 17 per cent in 2014.

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