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January 19, 2006 6:55 pm

Temasek nears Shin Corp deal

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Temasek, Singapore’s state investment agency, is closing in on the $1.7bn acquisition of a controlling stake in the business empire of Thaksin Shinawatra, the Thai prime minister, with the country’s central bank governor confirming that a takeover deal was imminent.

While Thais have been mesmerised by rumours that the prime minister’s family was seeking to sell part of its vast telecoms empire, Pridiyathorn Devakula, the central bank governor, on Thursday unexpectedly referred to the upcoming sale of the Shin Corp stake, attributing recent baht appreciation to foreign currency inflows linked to the deal.

The Thai baht hit 39.2 to the dollar, a 9½-month high, before slipping back to 39.4 to the dollar on Thursday.

Mr Pridiyathorn told Thai reporters that the baht strength was due to “an inflow of funds for a Shin share deal”, although he said he had no details regarding the transaction – not even the buyer.

People close to the situation said the sale of the Shinawatra family’s 49.6 per cent stake in Shin Corp was likely to take place through a series of share swaps involving Temasek-controlled companies. They said the final price for the stake in the conglomerate would be determined just before the execution of the deal but added that it was likely to be below Bt50 a share.

They added the deal, which had been denied repeatedly by Shin Corp, would probably be carried out over the next few days by three Thai brokers, including Phatra Securities. However, it is understood that while the talks are very advanced, a final agreement has not yet been signed and the deal could still collapse.

Shares in Shin Corp closed at Bt46.25, valuing the family stake at Bt68bn ($1.7bn).

A share swap would allow the Shinawatra family to diversify its holdings away from Thailand while at the same time cementing the relationship with Singapore.

Analysts said Singapore Telecom was the most likely Temasek company to swap shares with the family as it is in the same industry as Advanced Info Service –Thailand's largest mobile phone business.

People close to the deal said a Thai company or agency would probably partner Temasek, helping Mr Thaksin defuse criticism that his family was selling a strategically important Thai business to foreigners.

Under Thai law, Temasek would also be unable to buy Shin’s 51 per cent stake in Thai Air Asia since Malaysia’s Air Asia already holds 49 per cent in the airline, the maximum foreign ownership limit allowed in a Thai air carrier.

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