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Thai M&A enjoys healthy growth

M&A in Thailand has enjoyed unprecedented levels of activity recently. Hungry for assets, Thai companies are looking abroad for their acquisitions. According to UBS, M&A transactions involving Thai corporations have grown from an average of $3.7 billion a year to a record $18.7 billion in 2012.

The risk appetite of Thai companies has changed dramatically since the Asian financial crisis in 1997, when the need to survive in dire conditions trumped expansion. Now that companies have got their balance sheets in order and are supported by strong economic growth, many are looking for cheap assets arising from the eurozone debt crisis.

In 2010, Thai Union Frozen, Thailand’s largest canned and frozen seafood producer, acquired MW Brands, a French canned seafood business, for $833 million; in July 2012, state owned PTT Exploration and Production beat Royal Dutch Shell for natural-gas explorer Cove Energy for $1.9 billion; and in December last year, Thai agribusiness Charoen Pokphand Group bought HSBC’s stake in China’s second-largest insurer, Ping An. Thai based companies are getting aggressive.

"The acquisitions were made for a number of different reasons," says Ian Gisbourne, head of equity research at Phatra Securities. "Thai Union Frozen was already the leader in Thailand and was forced abroad to expand its business; for PTT, the need to expand overseas comes hand in hand with the fact that domestic natural resources are limited." What all transactions have in common, however, is that they are helping to deepen the stock market in Thailand.

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