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Last updated: January 23, 2006 12:52 pm

Shinawatra family sells Shin stake for $1.9bn

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The family of Thaksin Shinawatra on Monday sold its entire 49.6 per cent stake in Shin Corp – the telecoms empire founded by the Thai premier – to Singapore’s Temasek Holdings and a small group of Thai investors for Bt73.3bn (US$1.9bn) in an all-cash deal.

The long-rumoured deal is the largest foreign buyout in Thailand’s corporate history, and consolidates Singaporean control over Advance Info Systems (AIS), Thailand’s largest mobile phone operator. AIS is already 21.4 per cent owned by Singapore Telecom, which is controlled by Temasek.

The takeover sees the Shinawatra family cashing out of its lucrative mobile phone business at what some analysts say may well be the peak of its value, given the uncertainties over the looming reform of Thailand’s telecoms industry.

The sale to Temasek may also shield Mr Thaksin from the previously persistent allegations that he was using his political power to further his family’s business interests, although the mechanics of the deal are likely to come under intense scrutiny by opposition politicians in the coming days.

To circumvent laws limiting foreign equity in Thai telecoms companies to 49 per cent, Temasek has set up two Thai incorporated companies – Aspen Holdings and Cedar Holdings. They will hold 11 per cent and 38 per cent, respectively, of Shin Corp shares.

Aspen is a wholly-owned Temasek subsidiary, while Cedar is 49 per cent owned by Temasek, 10 per cent owned by Siam Commercial Bank, and 41 per cent owned by Kularb Kaew, a joint venture between Temasek and Thai investors. Temasek has lent Kularb Kaew Bt20bn to finance its part of the acquisition.

Temasek said that upon completion of the transaction, “Shin Corp would remain a majority Thai-owned company.”

Under Thai law, Temasek must make a mandatory tender offer for the remaining shares of Shin Corp at the price of Bt49.25 per share – the same price paid to the Shinawatras. However, S. Iswaran, Temasek’s managing director for investments, said Temasek had no plans to delist Shin Corp unless the stock exchange required it to do so.

Temasek must also make a tender offer for outstanding shares in AIS, though its tender offer price of Bt72.3 per share, a 30 per cent discount to recent market levels, is thought unlikely to find many takers.

Temasek said it had obtained a waiver from Thailand’s little-known “Takeover Panel” exempting it from the requirement to make tender offers for other listed Shin Corp subsidiaries such as Shin Satellite and iTV, ostensibly on the grounds that these companies represented less than 10 per cent of Shin Corp’s total value.

Monday’s takeover followed weeks of denials from both Shin Corp and Mr Thaksin of any talks with Temasek, or other foreign partners, about a possible buyout. However, Mr Iswaran said the two sides were in intensive talks for the last four to six weeks.

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