The Shin sale continues (17-01-2006)
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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The questions that you were unable to answer yesterday about the Shin Corporation takeover, you will probably be able to answer today as the news story unfolds. Let's look at some of the questions raised yesterday.
1. "Is there any hard evidence for the rumour?"
Today there is much harder evidence. We learn that "most Shin executives acknowledge the prime minister is on the verge of selling."
2. "Which foreign company is going to buy Shin Corporation?"
Today, companies in Japan and China are mentioned as well. Can you name them? Why did the "right of first refusal of the original shareholders" prevent them from closing the deal?
3. "What is the rumoured price per share and value for the entire deal?"
Today we learn that the Japanese mobile operator Docomo, the most technologically advanced mobile operator in the world, reportedly offered 70 baht a share. How did SingTel stop them? After stopping this lucrative deal, why is Singapore able to offer 49.25 baht per share?
What new issues are raised today? What could AIS and Thailand gain from Singapore ownership of AIS? Access to regional markets? Technological transfer?
Singapore is limited by its small size. Does Thailand have some things that Singapore does not have because of its small size? Singapore and Malaysia used to be one country. Are there historical reasons why Thailand might be a more desirable business partner than Malaysia? (See: Merger with Malaysia (1963 - 1965) in http://en.wikipedia.org/wiki/History_of_Singapore)
Is Singapore a more desirable owner for a Thai company than a Chinese or Japanese company? Could the proximity of Singapore to Thailand be a factor?
Isn't the issue of nationalism that arose during the recent FTA negotiations still an issue?
If the U.S. was going to buy Shin Corp there would probably be demonstrations on the street. What about other Asian countries? Why is there no problem here?
Bangkok Post Article 17-01-2006
TELECOMMUNICATIONS MERGERS & ACQUISITIONS'To whom' is the question for Shin, AIS employees
SRISAMORN PHOOSUPHANUSORNKOMSAN TORTERMVASANA
The uncertainty over the Shin group's share sell-off has shaken the confidence of employees from top-ranking executives to low-level staff, who believe for the first time that the founding Shinawatra family is leaving the business empire.
Despite repeated denials by Prime Minister Thaksin Shinawatra and Shin Corp and the lack of further details, most Shin executives acknowledge the prime minister is on the verge of selling his family's stake to Temasek Holdings, the investment arm of the Singapore government.
In their view, the question now is not whether there will be a sale but rather to whom.
A top executive at Shin Corp, who asked not to be named, said most Shin executives and staff wanted the family to finalise and announce the deal to the public to end months of market speculation and uncertainty.
"We [the executives] are not worried much about the sale since it was the business of the founding family. Our concerns are who the new partner or buyer is and what the new management will look like," he said.
An executive at Shin Corp said all executives of Shin and related companies should maintain their positions after the new partner takes full control, although many of the lower-level staff felt insecure about their jobs and the company's future.
However, Yingluck Shinawatra, the president of AIS and one of the prime minister's sisters, is widely expected to resign from her post following the sale.
The working environment at AIS was also clouded with uncertainty yesterday in the absence of any official announcement.
Market speculation over a foreign takeover of Shin Corp and Advanced Info Service has continued with rumours currently narrowed to two solutions - a share swap between Shin Corp and Temasek Holdings, and a sell-off of the family's entire 49% stake in Shin Corp to Temasek without any buy-back option.
The deal is widely expected to be settled and announced as early as this week or by the end of this month at the latest.
Another top executive at AIS said he believed AIS would have to compromise its independence if Temasek was in the driver's seat.
However, he agreed that AIS should become a "regional player" under a "global policy" following the new partnership with Temasek, thanks to the extensive global network of diverse businesses of Singapore's investment arm.
Meanwhile, another source said that in fact the Japanese telecom giant NTT DoCoMo, which had close business ties with the Shinawatra family, was the first to approach the Shinawatras in mid-2005, with Shin chief executive Boonklee Plangsiri representing the family in the talks.
NTT reportedly offered a price of up to 70 baht a share for the family's holding in Shin Corp.
Shares of Shin (SHIN) closed yesterday on the Stock Exchange of Thailand at 47.75 baht, up 1.75 baht, in trade worth 1.51 billion baht.
But the deal fell through due to the right of first refusal of the original shareholders, particularly Singapore Telecom (SingTel), with its 21% stake in AIS. Temasek is the largest single shareholder of SingTel.
The clause gave them the opportunity to purchase the shares before the offering was made available to others.
After NTT pulled out, China Telecom stepped in, but was soon deterred by the right of first refusal, the source said.
No deal was concluded until Temasek approached with the reference price of 49.25 baht.
The source said that the deal with SingTel took time due to a lot of details required in the due-diligence process.
The Shinawatra family has held talks with Temasek through its representative and financial adviser and not through Mr Boonklee.
But the Singapore side wanted only AIS and not Shin Satellite, the source added.
Vocabulary (in discussion above)
takeover - gaining control of another company by buying more of its shares than anyone else
technological transfer - the movement of technological knowledge to business partners, usually from a more technologically advanced country to a developing country
proximity - nearness
demonstrations - a protest, a march or gathering to show opposition to something
mergers - two companies joining to become one
(See: http://en.wikipedia.org/wiki/Mergers_and_acquisitions
note the mention of "due diligence" and "stock swaps")
acquisitions - buy another company or part of a company
shaken the confidence - no longer confident, they are worrying probably about the future and their job
acknowledge - saying that a fact is true when you are asked
is on the verge of - is going to happen very soon
felt insecure - worry, be anxious and nervous
buy-back option - a term in a contract giving the seller the right to buy back stock if they wish
compromise its independence - lead to less independence (implies this is not good)
in the driver's seat - in control
become a regional player - compete in regional Southeast Asian markets
deal fell through - deal was going to happen, but did not happen
the right of refusal of the first shareholders - existing shareholders often have a right given in a corporations by-laws or constitution to determine who can buy shares and how many shares they can buy (See Wikipedia on corporate governance)
deterred by something - something made them not want to do or continue doing something
reference price - the price that was set either by regulation or agreement for the deal
the due diligence process - the formal procedure of making sure that the company you are buying is what it appears to be (See Wikipedia on due diligence and a law firm's page)
