C.P. Group and Telenor Group have agreed to explore a merger of their respective Thai telecom operators True and Dtac. The partners said the new company will be a merger of equals, and bring together services provided by the two local companies, with the support of its key sponsoring shareholders.
According to Jørgen Rostrup, executive vice-president of Telenor Group and Head of Telenor Asia, the new company plans to raise venture capital funding together with partners of USD 100-200 million to invest in digital startups focusing on new products and services for the benefit of all Thai consumers.
Transaction details
If the transaction proceeds, it will consist of a voluntary tender offer for all outstanding shares of Dtac and True, followed by the amalgamation of Dtac and True creating a new company. The price for Dtac will be THB 47.76 per share, which represents a 25 percent premium to the one-month volume weighted average for Dtac shares, and the price for True will be THB 5.09, also a 25 percent premium.
The agreed exchange ratio is 10.221 True shares per Dtac share. The outcome of the tender offer will determine the final equalized ownership percentage between C.P. Group and Telenor Group.
All shareholders of Dtac and True will have the choice of participating in the tender offer or continue as shareholders in the combined company, which will be listed on the stock exchange of Thailand. The combined company faces a challenging operational environment over the next years and C.P. Group and Telenor Group recognize that not all shareholders may want to participate in this journey, which is why a cash alternative at an attractive premium is offered.
The involved parties aim to reach the necessary agreements by the first quarter of 2022. The current operations of True and dtac will continue to run their businesses independently until the transaction is completed. The transaction will be subject to approvals by relevant boards and shareholders and customary regulatory approvals, and the parties acknowledge that there is no certainty as to the completion of the transaction.
If completed, the deal would see the Dtac-True overtake Singtel-backed AIS as the largest mobile operator. The three operators more recently face competition from the National Telecom Company, created from the merger of state-owned operators CAT and TOT.
