Thai billionaire Sarath Ratanavadi plans to merge his listed power company with an affiliate that owns the nation’s most-valuable mobile phone operator, creating a business worth US$20.5 billion based on Tuesday’s closing prices.

Gulf Energy Development Pcl will combine with its telecommunications unit Intouch Holdings Pcl, the companies said in separate statements. Existing Gulf Energy shareholders will receive 1.02974 shares of the merged entity, while Intouch holders will get 1.69335 shares for every stock held, they said. Gulf owns about 47.4% of Intouch. 

Sarath, ranked as the second-richest Thai with a net worth of US$9.8 billion, is restructuring businesses focused on everything from renewable energy to telecommunications and data centres just three years after gaining control of Intouch. The revamp will allow the group to maximise benefits for future operations and investments, simplify the shareholding structure and cultivate new growth opportunities in energy, infrastructure and the digital landscape, Gulf Energy said.

“The combined expertise will benefit both companies and all stakeholders, increasing the potential of the new company to be a leader in the energy and telecommunications business,” Sarath said in the statement. The company will expand its energy portfolio into the renewable sector and also focus on significant digital expansion.

Gulf Energy, Intouch and Singtel Strategic Investments Pte Ltd and Sarath will make a tender offer for 36.25% of mobile carrier Advanced Info Service Pcl at 216.30 baht a share each. The offer price is below Advanced Info’s closing price of 220 baht on Tuesday.

The board of directors of Intouch also gave in-principle approval for a special dividend payout of 4.5 baht per share from retained earnings, the company said.

“The transaction is value-neutral in principle to Gulf” with the proposed special cash dividend and lower cost obligations as small positives, Sumedh Samant, an analyst at JPMorgan Securities (Thailand) Co, wrote in a note. Still, the new merged entity may have a 5% to 7% dilution on its earnings per share due to amortisation expenses following the consolidation, he said. 

Samant maintained an 'overweight' rating for Gulf Energy, with a target price of 50 baht.

Singapore Telecommunications Ltd (Singtel) said in an exchange filing that it supports the amalgamation between Gulf Energy and Intouch. The restructuring will simplify Singtel’s shareholding in its Thai associate Advanced Info by removing Intouch as the intermediary holding company, it said. 

Currently, Singtel holds 24.99% of Intouch, while Intouch holds 40.44% of Advanced Info, it said. 

Singtel is set to get about a 9% stake of the new company, and will also book a gain of S$400 million (US$298 million or RM1.39 billion) from the amalgamation, it said.

As part of the restructuring, Gulf Energy, Intouch and Sarath will also offer to buy 58.9% of Thaicom Pcl, a satellite operator, at 11 baht apiece. 

The restructuring is expected to be completed in the second quarter of next year, subject to all regulatory approvals. Bualuang Securities and UBS AG are advisers to Gulf Energy on the transaction. 

  - Bloomberg