Equity Analysis /

Thailand: ICT - Value additions from a TRUE-DTAC amalgamation deal

  • TRUE-DTAC amalgamation through share swap transaction

  • Implied current value of Bt2.05 and YE23 price of Bt2.58 for MergeCo

  • NBTC likely to approve the deal; easing industry price competition

Prasit Sujiravorakul
Prasit Sujiravorakul

Equity Research Analyst

Bualuang Securities
23 November 2021

We regard the TRUE-DTAC amalgamation deal as positive for the new company (“MergeCo”), led by the long-term value additions from future cost-reduction synergies, and for the mobile industry as a whole due to the lessened mobile price competition. We reiterate our TRADING BUYs on DTAC and TRUE, led by a 6-7% price gap to their tender offer prices. ADVANC remains our top pick, fueled by the indirectly reduced competition and its future price uplift.

TRUE-DTAC amalgamation through share swap transaction

The swap ratio regarding the allocation of shares in the new company (“MergeCo”) as a result of the amalgamation will be: (1) one existing share of TRUE to 2.40072 shares of MergeCo and (2) one existing share of DTAC to 24.53775 shares of MergeCo. The above swap ratio calculation is based on the assumption that the MergeCo will have 138,208.4m total issued shares at Bt1 par value after the amalgamation. Before entering the share swap transaction, the firm will conduct a conditional voluntary tender offer (VTO) for all outstanding shares of DTAC and TRUE at the VTO price for TRUE of Bt5.09/share and for DTAC of Bt47.76/share (a 25% premium to the one-month average prices for TRUE and DTAC shares).