Gulf Energy offers US$5.4bil for telco in second-largest Thai deal

BANGKOK (Reuters) - Gulf Energy Development, Thailand's biggest power producer run by billionaire Sarath Ratanavadi, offered a US$5.4 billion bid on Monday for Intouch Holdings, which controls the country's top mobile phone operator AIS.

The 65 baht (US$2.08) per share offer for the 81.1% shares of Intouch that Gulf doesn't already own, represents an 11% premium to Intouch's close on Friday. Intouch stock rose as much as 9% on Monday to 63.75 baht and closed at 63 baht.

The acquisition, if successful, will be Thailand's second-biggest ever intra-country deal after Tesco's US$10.6 billion sale of its local operations last year, Dealogic data showed.

"We see that Intouch is a good platform with diverse companies in its portfolio, whether digital or satellite businesses, e-commerce and other techonologies," Smith Banomyong, chief of Gulf asset management, said in an online briefing.

"It also has good cash flow and stability, good partners and shareholders, and strong management." Gulf, a third of which is controlled by Ratnavadi, said in a filing that if it is able to secure at least half of Intouch stock, it will have to offer to buy out Advanced Info Service (AIS) under Thailand's securities regulation. Intouch owns 40.45% of AIS.

Gulf said it does not intend to buy satellite operator Thaicom Pcl, Intouch's other holding, and will request Thailand's securities regulator to waive the requirement for a tender offer.

Gulf said it will offer 122.86 baht per share for AIS, a 27% discount to AIS' Friday close. Gulf's total bid for AIS and Intouch would then amount to some US$17 billion. AIS shares rose 0.89% on Monday.

Singapore Telecommunications, Singapore's largest telecoms firm, which owns just over a fifth of Intouch and 23% of AIS, said it was reviewing its options for the stakes.

"Singtel views its stakes ... as strategic investments and we believe in the long term outlook of the businesses," it said in a statement.

Intouch and AIS acknowledged the bid in separate filings. AIS did not comment further, while Intouch could not be immediately reached for a comment.

"Gulf's intention seems to be on Intouch rather than Advanced," said Ekkarin Wongsiri, analyst at Trinity Securities, adding that Gulf would already have to take on a lot of debt to buy Intouch.

"Its offer price for Advanced shares is also below current value, which means there is less likelihood shares will change hands," Wongsiri said, adding he expected Gulf to be able to secure up to a 70% stake in Intouch.

Gulf said it would use working capital and loans to fund the transaction.

If the deal goes through, the market will focus on Gulf's plans to shed debt, which could be partly achieved by AIS selling some of cellular towers, Kasikorn Securities analyst Pisut Ngamvijitvong said in a note.

(Reporting by Patpicha Tanakasempipat in Bangkok; Additional reporting by Kane Wu in Hong Kong and Aradhana Aravindan in Singapore; Writing by Sayantani Ghosh; Editing by Edwina Gibbs and Sayantani Ghosh)

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