$2-BN TAKEOVER: PM’s clan agrees to sell Shin to S’pore

Published on January 13, 2006

Thaksin sealed deal with Temasek on New Year trip to city-state: source. Singapore’s state-run investment agency Temasek is set to take over Shin Corp by buying out the Shinawatra family’s 40-per-cent stake worth Bt80 billion, a Shin source said yesterday.

The deal was cemented on the holiday visit made by Prime Minister Thaksin Shinawatra and his family to the city-state from New Year’s Day to January 4.

Two days later, on January 6, the two sides signed a letter of intent which would see the Shinawatra and Damaphong families give up their combined 40-per-cent holding. Payment for the shares would be made in two transactions next week, the source said.

There has been intense speculation over the past two weeks about the Shinawatra family’s alleged plan to get out of Shin in order to reduce political pressure from charges of conflict of interest.

The PM’s family stands to pocket a handsome premium from selling Shin, which controls Advanced Info Service (AIS), the country’s leading mobile-phone operator, as well as Thai AirAsia, Capital OK and iTV.

The takeover price of US$2 billion means that Temasek will be paying Bt69 for Shin shares, which closed at Bt44.50, down Bt0.25 yesterday. AIS lost Bt3 to Bt109. The local market underwent a technical correction after rallying strongly since the beginning of the year, buoyed by foreign buying.

Temasek is likely to allow the current management at Shin to remain in control.

“Khun Thaksin has been negotiating with the investors from Singapore since the beginning of last year. The sell-off of Shin will help ease political pressure. Besides, the telecom market has reached saturation level. It is better to bail out of the business at its peak rather than wait for the price to fall further,” the source said.

“The 3G [third-generation cellular service] is only a new technology. Investing in 3G would not help improve the margins of the company in any significant way, but it would further complicate the political problems.”

Temasek controls Singapore Telecom, a 21.4-per-cent strategic partner of AIS, the flagship of the Shin conglomerate. Earlier, reports suggested that SingTel would be the buyer.

The acquisition would boost Temasek and SingTel’s control of Shin to more than 60 per cent, but they are only interested in AIS’ mobile phone business, the source said. So the Shinawatra family would be given a buyback option for the TV station, consumer-finance company and budget airline.

An investment banker in Singapore said SingTel was definitely interested in Shin but would have to weigh political fall-out from the takeover.

He said it was unlikely the Shinawatra family would completely let go of AIS, which has been a big money-spinner.

“If they’re still in politics, they should have a cash-cow company to help raise funds for politics,” he added.