Telenor confirms CP Group joint venture; voluntary tender offer at 16% premium to current price

Norwegian telecoms giant Telenor confirmed on Monday that it was in talks with CP Group over a possible joint venture between its Thailand property DTAC and True.

In its press release announcing the JV, the group said that, “the new company will be a merger of equals, and bring the best of the two local companies.”

“The new company will be a leading telecommunications service provider with capabilities to accelerate Thailand’s progressive digital technology agenda in terms of network performance, innovation, investment strength and employer brand,” the statement goes on to say.

According to the statement, if the merger proceeds then, “the VTO price for dtac will be THB 47.76, which represents a 25 percent premium to the one-month VWAP for dtac shares, and the VTO price for True will be THB 5.09, which represents a 25 percent premium to the one-month VWAP for True shares.”

The agreed exchange ratio is 10.221 True shares per dtac share.

It is unclear whether Telenor was still looking to exit its position in Thailand following earlier reports from the London-based business intelligence service TMT Finance.

The statement goes on to say that the combined company faces a challenging operational environment. The telecoms sector has not been spared by the coronavirus pandemic and the downtick in tourism has affected both company’s bottom line. =

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.

“The current operations of TRUE and DTAC will continue to run their businesses independently until the transaction is completed,” the statement said.

Thai watchdog 

Krungsri securities’ analyst said the Thai regulators will likely accept the merger deal as it happened with the previous CP Group’s acquisition of Lotus and Makro. 

This time the decision will fall on to the The National Broadcasting and Telecommunications Commission (NBTC).

“We felt that NBTC had no intention to block this deal as the commissioner sees the benefit of this merger particularly 5G rollout,” said Phatipak Navawatana. 

“But there will be some certain rules needed to regulate this merger to allow fair competition.” 

On Monday, both of the telecom stocks opened the market by rising robustly. TRUE jumped by 13 per cent from its prior closing to 4.90 baht, while DTAC gained 11 per cent to 45.75 baht.

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