Thailand's M&A Activities Shows Positive Growth and is Expected to Peak in 2020, Says Report by Solidiance

Bangkok, Thailand, June 24, 2018 --(PR.com)-- According to Solidiance's latest report, Thailand's merger and acquisitions (M&A) activity has remained resilient in the past few years despite political uncertainty. Between 2015 and 2017, the average transaction increased by 21% from USD 39.7 million to USD 48.2 million. Meanwhile, transactions larger than USD 400 million also increased by CAGR 5.5%, signaling a growing appetite of M&A deals in Thailand.

Consumer sector to continue driving M&A forward

In terms of industry breakdown, consumer discretionary and staples had represented the largest sector for both deal volume and value, followed by industrial and material sectors between 2015-2017 and are still seen as promising and potential sectors to grow in 2018. As of 1Q18, 37% of M&A transaction value occurred in consumer discretionary sector, followed by energy (34%) and real estate (14%), respectively.

Leading the wave of acquisitions last year was TCC Group Holdings with total value of USD 1.3 billion through a variety of acquisitions such as:

a) Assets of Thai Hotel Investment Freehold and Leasehold Property Fund for USD 874.13 million

b) 252 existing KFC stores from Yum! Restaurants International (Thailand) Co. Ltd. for USD 342.55 million

Commenting on the future of M&A deals in terms of sector breakdown, Partner at Solidiance, Mickael Feige says, “Consumer sector is expected to be the key growing sector in the Thai M&A market given the increasing regional consumption spending and the recovery of Thailand’s exports.”

Bigger firms to focus more on outbound M&A

Traditionally, the Thai M&A market has focused more on domestic and inbound investments. But with further integration of ASEAN economic community (AEC) benefiting companies trying to capture market share in the region, heavyweight Thai companies such as Thai Beverage (ThaiBev), Indorama Ventures and Thai Union Group, have started to allocate their budgets in M&A overseas.

Taking this approach would allow the Thai heavyweight companies to diversify their risks and enable them to leverage the skills and resources obtained overseas to improve their overall operations as well as to stimulate technological and managerial capabilities.

Thailand’s M&A activities to peak in 2020

As of 1Q18, Thailand’s M&A transaction reached USD 2.2 billion with a total number 57 deals - a figure lower than what Thailand experienced in 1Q17 by almost half in terms of volume and value. However, Thailand’s strong GDP growth and rising FDI inflows should improve M&A growth opportunities in 2018 which is expected to reach similar levels as 2017 or higher.

One major M&A deal to note in early 2018 was the acquisition of Bongkot Project by PTTEP International Limited valued at USD 750 million in the energy sector. At present, 85% of the M&A transaction value in early 2018 was from domestic investments resulting from a recovery of exports in the industrial sector.

Backed by a manufacturing-driven economy, Thailand is perceived as a global destination for tourism and an emerging manufacturing hub. Moreover, the government’s commitment to invest and foster a business scheme in the Eastern Economic Corridor will further stimulate market opportunities. Thailand will remain an attractive stage for domestic, outbound and inbound M&A deals which should reach its peak in 2020.