Singtel associate Intouch Holdings has entered into a merger deal with Thailand’s Gulf Energy Development, which will result in the formation of a new public entity.
Gulf Energy is a holding company incorporated in Thailand that invests in energy, infrastructure, utilities and digital businesses. It is Intouch’s largest shareholder with a 47.4 per cent stake, while Singtel Global Investment – a wholly owned subsidiary of Singtel – holds a 24.99 per cent stake in Intouch.
Upon completion of the amalgamation, Intouch and Gulf will be dissolved and a new legal entity will be formed with the status of a public limited company in Thailand. Singtel intends to list the shares of the new entity on the Stock Exchange of Thailand.
In a press statement on Tuesday (Jul 16), Singtel said the restructuring will simplify the group’s shareholding in its Thai associate Advanced Info Service (AIS), by removing Intouch as the intermediary holding company.
Singtel and Gulf currently hold a 24.99 per cent and 47.37 per cent stake in Intouch, respectively, while Intouch holds a 40.44 per cent in AIS. All three entities are listed on the Stock Exchange of Thailand.
In exchange for its stake in Intouch, Singtel will receive an estimated 9 per cent stake in the new entity, which the group expects to become one of the largest and most liquid listed companies in Thailand.
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Singtel will also book an estimated gain of S$400 million from the amalgamation.
After the transaction is completed, it will evaluate options for its stake in the new entity “as it continues to be a long-term investor in Thailand, while proactively managing capital to create value for shareholders in line with its Singtel28 strategy”.
Singtel’s group chief financial officer Arthur Lang said: “For some years now, Singtel and Gulf, as major shareholders of Intouch, have been working to streamline the diversified holding structure of Intouch…
“We believe it is in the best interests of stakeholders to simplify AIS’ shareholding structure, and are supportive of this move. We have always preferred to hold direct stakes in our associates.”
In addition to the special dividend of 4.50 baht per share which Intouch will be proposing for its board’s approval, Lang said the voluntary tender offer will allow the group to increase its 23.3 per cent direct stake in AIS, “which has consistently been a strong brand and business”.
As part of the transaction, Singtel will participate in a conditional voluntary tender offer with Gulf, Intouch and Gulf’s major shareholder, Sarath Ratanavadi, to acquire all other shares in AIS’ public float at 216.3 baht per share.
Singtel will be allocated the first 5 per cent of shares in AIS tendered in acceptance of this offer, and the maximum number of shares it can acquire will not exceed 10 per cent of shares in AIS. There is no intention to privatise AIS at this juncture.
With Thailand a key market for Singtel in South-east Asia, Lang said, the group sees “good growth potential” with the country’s rapid digitalisation and 5G adoption, as well as the mobile industry’s return to a more sustainable structure.
“We expect AIS to strengthen its position as it executes on its fixed mobile convergence strategy to deliver greater digital access. We will continue to invest in AIS with our Thai partner to help accelerate Thailand’s digital transformation,” he added.
The transaction is expected to be completed by the second quarter of 2025, subject to customary regulatory approvals, approval from the shareholders of Intouch and Gulf, and satisfaction of conditions precedent in the amalgamation agreement.
Assuming the transaction had been completed on Mar 31, 2024, which marks the end of the group’s recently completed financial year, the pro forma financial effects on the net tangible assets per Singtel share – as at Mar 31 – would be S$1.05, compared to S$1.02.
Assuming that the transaction had been completed on Apr 1, 2023, which is the beginning of the group’s most recently completed financial year, the pro forma financial effects on the earnings per share would be S$7.44, compared to S$4.82.
Shares of Singtel closed S$0.03 or 1 per cent lower at S$3.02 on Wednesday.
