Gulf Energy Investors Approve $30 Billion Energy, Telco Deal

(Bloomberg) -- Shareholders of Thai billionaire Sarath Ratanavadi’s power company Gulf Energy Development Pcl approved on Thursday a planned merger with its telecoms affiliate Intouch Holdings Pcl, paving the way for the almost $30 billion transaction to get done.

Gulf Energy’s stock is set to rise the most in two weeks after almost all shareholders approved the merger, giving the company a market value of $20 billion. Intouch’s shares are headed for biggest gain in nearly a month, valuing the firm at $9.2 billion.

A combination of the companies will accelerate business and earnings growth of the newly-created entity, Gulf Energy CEO Sarath said at a shareholders meeting in Bangkok.

“The almost unanimous vote of Gulf Energy shareholders offered a much more positive outlook,” Sarath told reporters. “I am willing to buy out all shares of dissenting shareholders who vote against it.”

Only a few minutes before the vote result, Sarath had said that he still didn’t rule out withdrawing a proposed purchase of shares from dissenting shareholders of Gulf Energy and Intouch if they voted overwhelmingly against the deal.

Sarath had been leaning against buying out minority investors who may oppose the combination of the two firms, Bloomberg News had reported earlier. Such a move could have represented a major hurdle for the deal, people familiar with the matter had said.

Sarath, who along with his family control a roughly 74% stake in Gulf Energy, would need to buy out those minority investors to be able to complete the deal. Under the country’s law, more than three quarters of shareholders in the meeting need to approve the deal and the biggest shareholder needs to purchase the shares from those dissented investors. 

Sarath is Thailand’s richest person with a net worth of $15.3 billion, according to the Bloomberg Billionaires Index.

Gulf Energy in July said it plans to combine with its telecom unit Intouch to simplify the group’s shareholding structure and maximize benefits for future operations and investments. A key condition for the deal to go through is that Sarath buys out those minority shareholders who vote against the merger at the market prices on Wednesday.

As part of the agreement, the billionaire has a right to withdraw from acquiring shares of Gulf Energy from dissented investors if the share price on Oct. 2 is higher than 45 baht. The shares closed at 56.50 baht on Wednesday, 26% above Sarath’s stated ceiling. For Intouch, Sarath has an option to cancel the offering if the company’s stock price is above 76 baht. The stock closed at 91 baht close on Wednesday.

(Updates with vote from Gulf Energy meeting from first paragraph)

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