Corporate M&A 2021

Last Updated April 20, 2021


Law and Practice


Weerawong, Chinnavat & Partners Ltd represents purchasers, sellers, advisers, lenders and financial intermediaries in domestic and cross-border M&A, LBOs and divestments. The firm acts for Thai and international clients on corporate transactions of all kinds, including acquisitions of listed companies, private equity investments and M&A of companies engaged in activities across the full breadth of the Thai economy. It also assists Thai companies on their expansion elsewhere in Asia and around the world. The firm advises clients on acquisition financing, regulatory issues, international tax matters, competition law, IP issues, real estate matters, and labour and environmental issues that involve complex cross-border M&A. For its many private equity clients, the firm adds value through its extensive experience in structuring bids, negotiating and drafting acquisition and financing documentation, and structuring exit strategies for investors.

The COVID-19 pandemic has reduced activity to some extent, though M&A transactions still continue if there is a strategic purpose.

For the first time, the Thai Competition Act had an impact on M&A transactions as the requirement for pre-transaction approval came into effect for the first time. The largest transaction of the year, the THB330 billion (USD11 billion) disposal by the UK Tesco group of its Thai business to companies in the Charoen Pokphand group, required such an approval and the terms of the approval provided were contentious, with a strong minority opinion against the approval of the transaction.

Activity did not focus on any particular segment: retail was dominated by the huge Tesco transaction, and manufacturing and real estate also saw activity.

A share acquisition is the primary means of acquiring a company. It is less complicated and has fewer legal implications than asset sales.

The primary regulator in the acquisition of shares of public companies listed on the Stock Exchange of Thailand (SET) is the Securities and Exchange Commission (SEC), applying the Securities and Exchange Act (SEC Act) and regulations made under it. The filing and disclosure obligations for such share acquisitions are outlined in the governing laws and regulations. 

With respect to merger control, generally, the Trade Competition Commission (TCC) has the authority to oversee and regulate M&A activities in the generic industries that are not governed by specific laws in Thailand.

In addition, M&A activity in certain industry sectors is regulated by specific regulators; for example, the insurance business is regulated by the Office of the Insurance Commission, banking and financing businesses are regulated by the Bank of Thailand, and telecommunications is regulated by the National Broadcasting and Telecommunications Commission (NBTC).

In general, foreign investment is governed by the Foreign Business Act (FBA), international treaties and privileges granted by the Board of Investment. Pursuant to the FBA, a foreign entity is prohibited from conducting certain businesses in Thailand unless a Foreign Business Licence is obtained from the Ministry of Commerce. For these purposes a foreign entity includes a Thai incorporated company 50% or more of whose shares are owned by foreigners.

Businesses in the financial, securities and insurance sectors are exempt from the ownership requirements of the FBA, but are subject to foreign ownership restrictions under the specific legislation applicable to them.

In addition, pursuant to the Land Code, a foreign entity, including a Thai legal entity which is majority-foreign owned, is prohibited from owning land in Thailand unless, among other things, an Investment Promotion Certificate is granted by the Board of Investment.

The Trade Competition Act BE 2560 (2017) (TCA) is currently the main legislation governing the merger control regime in Thailand. Any merger that meets the requirements under the TCA and the relevant subordinate regulations issued thereunder is subject to the merger clearance process as stipulated under the TCA. The application of the TCA also covers State-owned enterprises and public organisations, but exemptions have been provided for duties specified by law or Cabinet resolutions, for the enhancement of national security, public benefit or the provision of utilities.

The TCA does not apply to certain industries where merger control is already regulated by specific legislation for that industry (ie, currently the telecommunications, broadcasting and television, insurance, financial and energy sectors).

An important point to note in relation to the merger control rules under the TCA is that it divides regulated mergers into two categories:

  • those that require approval (pre-merger filing) from the Trade Competition Commission (TCC); and
  • those that only require notification to the TCC (post-merger notification).

Essentially, submission of a pre-merger filing will be required if the merger may result in the creation of a monopoly or a business operator with a dominant market position. Conversely, if the merger may substantially lessen competition the merging entity (or merging entities) must notify the TCC within seven days after the completion of the merger.

The Labour Protection Act BE 2562 (2019) (LPA) requires that for the transfer of employees in a merger or amalgamation of businesses, each employee has the right to choose and consent whether they would like to transfer employment to the new employer or not. If the employee does not consent to such transfer, its existing employer will have to terminate the employment and provide severance pay to such employee. No employee consent is required on the sale of shares in a company.

There is no national security review for acquisitions in Thailand.

The most significant legal development is the coming into force of regulations under the Trade Competition Act of 2017

Some changes of detail in the regulations relating to exemptions from the requirements for mandatory tender offers. Previously it was possible to pass through a mandatory tender offer trigger point through a rights offering, and then be free to accumulate further shares until the next trigger point was reached: now passing through a tender offer trigger point by way of a rights offering does not immediately trigger a mandatory tender offer but the subsequent acquisition of any shares in the target will do.

Stakebuilding is commonly employed prior to launching an offer; the strategy is subject to the level of control the acquirer wishes to attain. A tender offer for all the shares in a listed company is mandatory when 25% of the total voting rights in the listed company are acquired.

If an acquirer reaches or passes through 5% or a multiple of 5% of the total voting rights of shares in the listed company (on the way up or on the way down), the acquirer has the duty to disclose such information by submitting a report on the acquisition or disposition of the securities (Form 246-2) to the SEC within three business days after such acquisition. The holdings of related persons of the acquirer and persons acting in concert with the acquirer, and their related persons, are aggregated for the purposes of determining whether the disclosure requirement is triggered. (Section 246 of the SEC Act)

A separate disclosure obligation arises if the acquirer acquires convertible debt securities or warrants and the number of shares which the acquirer would hold following conversion or exercise of warrants would exceed 5%, or a multiple of 5%, of the total voting shares of the target.

Directors, members of management, auditors and certain persons connected to them, including companies in which they have an interest exceeding 30%, are obliged to disclose details of any acquisition or disposal of shares, securities whose price is linked to the shares or listed derivatives (Section 59 of the SEC Act).

Public companies are legally prohibited from restricting the transferability of their shares, although they are allowed to impose such restrictions as are necessary to ensure compliance with any foreign ownership restrictions to which they may be subject.

Dealings in derivatives are allowed.

Under securities disclosure laws there is no requirement for disclosure unless the derivative is in the form of a convertible debt security or warrant. In the case of exchange traded derivatives any acquisition by directors, management, auditors  and certain person or entities connected with them require disclosure.

Currently, there are no specific provisions on derivative transactions for competition purposes. Whether the acquisition of derivatives will be subject to a pre-filing/notification obligation under the TCA depends on the transaction structure. For example, if the closing of the derivatives transaction will not result in any transfer of the underlying shares, such transaction will not trigger merger clearance in Thailand.

Shareholders have to make known the purpose of their acquisition and their intention regarding control of the company.

As a general rule, the SET Information Disclosure Guidelines require the disclosure of a deal only when the deal is confirmed. In practice, therefore, a company should disclose the deal once any definitive agreement is signed. However, there are exceptions under which the company could prematurely disclose such information regarding a deal; for example, in the event that incorrect information that affects the stock price is leaked to the public.

Market practice on the timing of disclosure does not differ from legal requirements.

Full-scale due diligence – including legal, financial, accounting, HR and other relevant information – is required, except in certain circumstances where limited scope due diligence is preferable to the acquirer.

In certain cases relating to the acquisition of a holding in a listed company the seller may insist that the purchaser simply relies on publicly available information.

The practice has not been affected by the COVID-19 pandemic.

Generally, standstills and exclusivity agreements are demanded in the negotiation phase.

Tender offer terms are not commonly documented in a definitive agreement. If a tender offer is triggered by the acquisition of a controlling shareholding, the terms of the tender offer are purely a matter for the acquirer as the tender offer will occur after the closing of the sale of the controlling shareholder has occurred.

There is no general rule for the time it takes to acquire or sell a business in Thailand. It is possible that a controlling stake may be sold comparatively quickly if the selling shareholder is able to dictate the terms on which acquirers acquire its holding (for example by restricting due diligence and giving limited representations and warranties).

Once the sale of a controlling stake has occurred, if a tender offer is triggered, the tender offer must be open for between 25 and 45 business days though the timetable can be extended if a competing bidder emerges. It is possible to specify conditions to the making of the tender offer, such as competition approval, but conditions have to be satisfied within one year of announcement.

Governmental measures taken to address the COVID-19 pandemic have not created major practical delays or impediments to the deal closing process.

Under securities regulations, the acquirer must conduct a tender offer for all he shares and, subject to certain exceptions, equity-linked securities of a target company upon acquisition of 25%, 50% or 75% of the total voting rights of the target company that is a listed company. Acquisitions by the acquirer, its related persons and its concert parties and their related person will be aggregated for this purpose.

A mandatory tender offer may be triggered not only by acquiring shares in the target but also acquiring shares in an intermediate or ultimate holding company which controls the target, under the chain principle.

Cash is the most common form of consideration in a business combination. In a takeover offer, alternative forms of consideration can be offered but one has to be cash.

There are two types of tender offer. Firstly, there is a "mandatory" tender offer, which is triggered once the acquirer acquires 25%, 50% or 75% of the total voting rights of the target company. The mandatory tender offer must be unconditional as to the level of acceptances and must offer to buy all the shares of the target company. Secondly, there is a "voluntary" tender offer, in which the acquirer may set an acceptance condition, usually a minimum percentage of shares it wishes to acquire. In this case, if the acquirer makes the tender offer, but the number of shares falls short of the minimum percentage, the acquirer may withdraw the tender offer.

In the case of any tender offer, an offeror may cancel a tender offer if an event or action occurs after the offer document has been filed with the SEC but during the offer period which causes or may cause serious damage to the status or assets of the offeree’s business, and the act or event does not result from the acts of the offeror or an act for which it is responsible. However the right to cancel must be stated in the offer document.

It is also possible to include a material adverse change condition in a voluntary tender offer and in 2020 Bangkok Dusit Medical Services terminated a tender offer for Bumrungrad Hospital after the target’s business was adversely affected by the COVID-19 pandemic.

The minimum acceptance condition is usually set at a certain percentage of the total voting rights. The relevant control threshold in Thailand is more than 50% of the total voting rights. However, an acceptance condition is available only in a voluntary tender offer.

A privately negotiated transaction can be subject to the availability of financing. However a takeover offer cannot be.

Security measures such as break-fees, non-solicitation provisions, and non-disclosure and confidentiality provisions are among the most commonly employed measures.

There are no new contractual considerations and tools for managing COVID-19 pandemic risk in the interim period or any changes in the regulatory environment which have impacted the length of the interim period.

Minority shareholders may protect their position in a shareholders’ agreement. However, care would need to be taken to ensure that a concert party relationship is not created between the parties to the shareholders’ agreement.

Partial tender offers can only be made with the approval of a shareholders’ resolution of the target and must be for less than 50% of a company’s shares.

Shareholders can vote by proxy in Thailand.

There is no squeeze-out mechanism under Thai law. In practice, after completion of a tender offer there are typically a small number of shareholders who cannot be traced or who have refused to sell. As long as these shareholders still hold shares in the target, delisting may not be achieved and the basic rights of these shareholders (including notice of, and to attend, speak and vote at general shareholders' meetings) must be respected. If a resolution to delist the target is passed following completion of a tender offer, this resolution triggers the making of a mandatory offer to the dissenting minority shareholders. There are statutory provisions which determine the price at which this delisting tender offer must be made.

It is common for the potential acquirer to enter into an agreement to tender with the principal shareholder. Since a squeeze-out mechanism does not exist, the potential acquirer normally commences the negotiation and concludes the agreement with the principal shareholders prior to conducting the tender offer. Once an agreement is entered into, there is no exit mechanism for the shareholder unless the parties agree otherwise, although there is some doubt on the enforceability of an agreement to tender shares since the tender offer regulations provide that an accepting shareholder has the right to withdraw its acceptance for a certain period.

The bid must be made public when the acquirer triggers the minimum tender offer threshold (ie, at 25%, 50% and 75% of the total voting rights) by submitting a statement of intention to make a tender offer on Form 247-3 to the SEC within one business day after such triggering.

In case of a voluntary tender offer, a bidder is required to submit a statement of intention to make a tender offer on Form 247-3 to the SEC within three business days after it has announced the tender offer. It will be deemed to have announced the tender offer in certain cases including notifying the directors of the target and shareholders holding 10% or more of the shares of the target. If it fails to file the form within this time it will be deemed to have announced an intention not to make a tender offer, meaning that it will be unable to proceed with a tender offer for one year.

In the case of an issue of shares in a business combination to the target shareholders it would be necessary to prepare a registration statement and prospectus complying with the requirements of the SEC Act, unless the issue fell within the scope of private placements which are exempt. For completeness, it must be pointed out that in the case of a statutory amalgamation which operates as a merger on the basis of A=B+C, no registration statement or prospectus is required.

For the tender offer, the bidder is required to produce and attach to the tender offer form audited financial statements prepared in accordance with Thai GAAP and consolidated financial statements (if the acquirer has subsidiaries) for the latest fiscal year as evidence to prove that it has sufficient funds to pay for the shares tendered for.

It is not necessary to disclose the transaction documents in full, only a summary of the transaction is required in the process of a tender offer.

Directors have fiduciary duties to the company and the company’s shareholders, and must perform their duties responsibly, with due care and loyalty. Directors must also comply with all laws, the objectives and articles of association of their company, the resolutions of the board of directors' meetings and the resolutions of the shareholders' meetings, in good faith and with care to preserve the interests of the company. A director is liable for any damage to the company resulting from their negligence, or failure to perform their functions. Directors do not have duties to a wider class of stakeholder.

It is not common practice in Thailand for boards to establish special or ad hoc committees in business combinations, though individual directors may not vote on matters where they have a conflict of interest.

When considering an alleged breach of care in relation to a fiduciary duty, the court often uses the "business judgement rule" standard.

The board of directors usually seeks advice from financial advisers and legal counsellors in the case of a business combination. A decision made by a board of directors based on the advice of these professional advisers will be considered to be a decision made with due care.

Under Thai corporate law, a shareholder who has a special interest in any matter is not allowed to vote on such matter. Failure to abide by this restriction does not render the resolution void. However, the resolution may be challenged in the appropriate court.

A director who has an interest in any matter is not allowed to vote on such matter. Failure to abide by this restriction does not render the resolution void. However, in the case that such failure causes damages to the company, the company is entitled to claim compensation from the director.

Hostile tender offers are permitted in Thailand. However, given the existence of large family- or insider-controlled shareholdings in most Thai listed companies, a hostile tender offer is unlikely to succeed.

In the period before a bid is made, there is generally no restriction on a target board’s taking defensive measures against a hostile takeover.

Once a bid is made the target is restricted form undertaking certain activities during the takeover period, including:

  • offering new shares;
  • acquiring or disposing of material assets;
  • incurring debt;
  • entering into or terminating a material contract not in the normal course of business;
  • buying back shares; and
  • declaring an extraordinary interim dividend.

There are no common defensive measures as hostile tender offers are very rare and unlikely to succeed due to large family- or insider- controlled shareholdings in most listed Thai companies.

The directors’ use of defensive measures must be consistent with the directors’ fiduciary duties and duty to act in the best interests of their company.

On receipt of a tender offer, the target's directors have an obligation to provide information and a recommendation to shareholders, and the directors are under a general duty to act in the best interests of the company.

The board of the target must:

  • notify all known shareholders of the receipt of the offer and its terms;
  • give its opinions on the status of the company’s business and a forecast of the future results of its operations (disclosing the assumptions on which the forecast is made) and the accuracy of the information concerning the company’s business given in the offer;
  • disclose any relationship or agreements between any director of the target and the bidder;
  • recommend whether shareholders should accept or reject the offer; if the board’s recommendation is not unanimous, the recommendation of each director must be given separately; and
  • appoint an independent adviser to advise the shareholders on the terms of the offer and whether to accept or reject it; the adviser is required to give its recommendation "with due care in accordance with professional standards, taking account of the interests of the minority shareholders.

Litigation is not common in connection with M&A deals, and essentially unknown on public tender offers. On privately negotiated transactions there may be litigation on issues of indemnity, breach of contract and warranty claims.

Litigation on privately negotiated transactions would generally be brought after closing.

Thus far, there has been no new lessons learned since early 2020.

There is little, if any, shareholder activism in Thailand

This is not applicable in Thailand.

This is not applicable in Thailand.

Weerawong, Chinnavat & Partners Ltd

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Trends and Developments


Baker McKenzie is one of the largest law firms in Thailand: its corporate and commercial and mergers and acquisitions practice group has more than 20 partners and 80 associates, with strong industry knowledge, assisting Thai and international clients from all sectors and industries in both multi-jurisdictional and domestic transactions. The team has vast experience as trusted counsel, built up over many years, conducting due diligence and structuring M&A transactions, including negotiation and post-deal integration, advising on takeover rules, tender offers, antitrust and competition laws, local regulatory obligations, and joint ventures, among others, and specialises in areas requiring particular focus in Thailand, collaborating seamlessly across all practice groups (including tax, finance, antitrust and competition, employment, compliance, and intellectual property). Baker McKenzie is committed to being an ethical and socially responsible business.

Recap of 2020 M&A Activities in Thailand

The first half of 2020

M&A activities in Thailand kicked off with high expectations in 2020. High-value M&A and joint venture transactions formed and proceeded thanks to the healthy economy in Thailand and Southeast Asia. Even with a forecast of slightly lower M&A transaction volumes and deal sizes in 2020 compared with those in 2019, a number of big-ticket M&A transactions were still launched.

The last month of the first quarter of 2020 marked an unprecedented challenge due to the outbreak of the coronavirus. The Asian market was first to be affected, followed by other markets across the globe. This significantly impacted the M&A landscape and momentum of activity in all countries, including Thailand where the tourism industry has been the backbone of the economy for decades.

The COVID-19 situation mainly delayed M&A transactions in the pipeline. Transactions planning to be launched during the second and the third quarter of 2020 were put on hold as parties wanted to re-evaluate the impact of the COVID-19 outbreak on the valuation and deal certainty. Nevertheless, most of the transactions that were signed but were not yet closed had managed to close with slight delays on the completion timeline, while some did not close due to the failure to obtain acquisition financing and some used the COVID-19 outbreak directly or indirectly as an exit.

The second half of 2020

Despite the COVID-19 situation, M&A activities have picked up in the second half of 2020. Key transactions in 2020 include the acquisition of Tesco in Thailand and Malaysia by CP Group, which is one of Asia's largest acquisitions in 2020. Also in the F&B sector, the acquisition of Bon Chon Chicken in Thailand by Minor Group is another highlight transaction. Additionally, the attempted takeover and tender offer of Bumrungrad Hospital shares by Bangkok Dusit Medical Services, another hospital conglomerate, is big news in the healthcare M&A space in 2020.

In the financial institutions sector, 2020 saw integration transactions among financial institutions strengthening their presence and business operations in Thailand. Amalgamation between FWD Life Insurance and SCB Life Assurance marked the very first amalgamation transaction between life insurance companies in Thailand, following the acquisition of SCB Life Assurance by FWD Group in 2019. On a non-life insurance side, Tokio Marine Insurance also fully integrated its business with Safety Insurance, and transformed into Tokio Marine Safety Insurance Thailand. With the integration in progress, TMB Bank and Thanachart Bank will become the sixth largest bank in Thailand with a client base of more than 10 million customers - the full post completion integration expects to be done by July 2021.

Thai companies also use outbound M&A transactions as a strategy to expand their business operations into other regions, with specific focus in Southeast Asia. A key transaction includes Bangkok Bank's acquisition of majority shares in PT Bank Permata Tbk, Indonesia's 12th largest bank by the size of total asset value. SCG Packaging announced their investment in the UK and Vietnam to expand its food packaging services in the global market. Investment by major Thai energy players in Vietnam also increased.

What is expected of 2021

Shift of focus to Asia

Since the beginning of 2021, there has been a shift of investment focus into the Asian market and capital inflow due to the recovery of COVID-19 impacts. Comparing this to other regions and potential upsize in valuation, Thailand may benefit from more M&A volumes. Changes in the United States' political landscape and the country's potential ease of political tension with China are also positive factors driving inbound investment into the region.

Thai companies also eye for investment and expansion into global and regional markets. There should be an increasing appetite of big Thai players for outbound investment or expansion by way of joint venture and franchising in various sectors. Vietnam will continue to attract Thai investors and may have a chance to welcome more investment due to the uncertainty over the political situation in Myanmar.

Sector focus

It would be no surprise to see M&A activities continue to be active in sectors that benefit from the change of people's lifestyle after COVID-19 and the new normal way of living such as e-commerce, healthcare and technology, as well as sectors that have a degree of resiliency such as insurance, energy, and oil and gas.

Digitalisation and disruption are also key themes and factors driving M&A activities in 2021. While fintech and digital payment systems are key targets for M&A in the banking and finance industry, other industries also have appetite for technology or AI related assets. For example, healthtech companies and start-ups are beginning to receive funding from large conglomerates. Generics and biosimilars have begun to become trends in the healthcare and life sciences space. Other significant developments and trends in the pharmaceutical and healthcare sectors include telemedicine and telehealth, and the relaxation for the use of cannabis and hemp for specific purposes. Investors focusing in this industry should closely monitor these developments and investment opportunities.

For sectors that have been significantly impacted by the COVID-19 outbreak, such as hospitality, aviation and real estate, more M&A activities should be expected with a change in deal strategy and deal structure. Deals are foreseen to pick up with revision in valuation in the real estate sector in response to COVID-19 vaccinations and ease of international travel restrictions. This should provide M&A opportunities for investors with cash and liquidity.

The merger of companies in the same sector in the real estate or hospitality business may take place in order to minimise operating costs and reshape the strategy post-crisis. Real estate investment trust (REIT) transactions are also expected with the new features, allowing real estate developers to manage short term cash flow issues with buyback options while increasing the level of confidence of investors with buyback obligations, details of which will be discussed later in this article.

Asset disposal is more and more common in the F&B industry where many global F&B chains reposition themselves from investors to franchisors. This strategy not only enables the chains to focus more on product development and brand strengthening but also provides opportunities to investors who prefer quick access to the market and related know-how. Also in line with the analysis from McKinsey, companies in consumer goods and retail sector have potential to enter into M&A space seeking for targets that could help with the platform, online or back support aspects to strengthen the customer experience and ensure the supply chain resilience.

M&A for risk diversification and collaboration

The COVID-19 outbreak emphasises the importance of risk diversification and investment portfolio management, and M&A could be used to respond to the need to diversify. Cross-industry investment where the major operator in one sector begins to invest in another sector has become more common. Investment may be made by way of venture capital investment or joint venture. Two or more big players in different industries will also collaborate through joint ventures in order to gain quick access to the sector that they would want to diversify their investment portfolio, in exchange for customer base or capital to fund the business of the joint venture company. M&A for risk diversification and collaboration could also be done by cross jurisdiction investment.

Increase in outbound M&A activities

As mentioned earlier, local Thai players have seen outbound investment as an opportunity to diversify their investment portfolio, and also expand their regional or global presence. With the trending demand in technology and disruption space, an increasing number of outbound M&A transactions are expected due to the lack of attractive targets in the local market. Asian countries, especially emerging market countries, are among the most popular investment target destinations as the investors see potential market upsize and business growth with reasonable investment valuation. The appreciation of the Thai Baht since 2020 will have a positive contribution towards more outbound investment transactions in 2021.

Distressed M&A

The COVID-19 pandemic gave rise of the expectation for "distressed M&A" resembling the situation in Thailand during the 1997 Asian financial crisis, especially sectors that are directly impacted from the travel ban, social distancing policies and sharp decline in tourism activities. The situation turns out to be somewhat different as the stock price in the Thai market, as well as other markets, rebounded following the initial crash. Unlike the Asian financial crisis, only few companies entered into the insolvency and rehabilitation proceedings.

Even though the players in the market are in financial distress, there are not many distressed M&A activities at the same scale as expected, partly because, unlike the Asian financial crisis, the banking institutions remain intact in the situation and manage to arrange for debt management with the debtors. With the creditors allowing for the debt service extension and the government policy supporting certain operational costs, the operators chose to restructure their operation with prospects to regain normal operation after the outbreak is in control, instead of entering into the distressed sale process. Some sale and acquisition transactions may have pricing revisions and revisited certain commercial and financial arrangements, but are still being transacted in a non-distressed nature.

Nevertheless, the impact of COVID-19 on businesses has not yet been fully seen, and the distressed M&A potential should not be put off the radar. With certain companies having already been in the insolvency and rehabilitation process, disposal of certain assets and spin-off of non-core business can be expected, providing opportunities to investors with liquidity or strategic buyers for deep discounted acquisitions. Sectors that the potential distressed investment opportunities are expected to increase include industrials, manufacturing and transportation, and energy, mining and infrastructure.

M&A player: the rise of private equity and venture capital

There has been an increase in private equity and venture capital activities in Thailand during the past few years. Initially, private equity and venture capital have been active in technology related sectors before expanding into other sectors such as consumer goods and retail. Many major listed companies and commercial banks in Thailand have their own investment and venture capital units focusing on venture capital investment, collaboration and technology know-how opportunities, especially later stage start-ups with exit potential, while some units set up start-up boot camps providing advice and support to start-up founders with an aim to secure the deal at an early stage.

The Thai Securities and Exchange Commission also promotes the activity by allowing the formation of special purpose vehicles for private equity activities, ie, the private equity fund and the private equity trust, as alternatives to a limited company. Venture capital and private equity investment activities in Thailand, same as in other countries, are expected to play a great role in the M&A landscape.

Internal restructuring

In addition to normal buy-sale transactions, the internal restructuring among the group company or the conglomerates is another key area to focus on. The internal restructuring activity may be driven by the centralisation or decentralisation policy of each group. With a diversified portfolio growing, an exit strategy may be employed so the restructuring is done in preparation for an exit, either through the sale/spin-off or the initial public offering. Also, the internal restructuring may be implemented due to the business integration at the parent company level, the cost saving strategy and the regulatory requirement purposes.

With the provision of tax exemptions and tax benefits through the entire business transfer or partial business transfer scheme, the internal restructuring offers operators the chance to restructure the business and the group company at minimised transaction costs.

Deal-making strategies

The COVID-19 outbreak not only creates an impact on the M&A momentum in Thailand but also affects the deal making strategy which may continue even in the post-COVID era. Key observations include:


Cash is still the most common form of consideration while there has been an increase use of non-cash payment in transactions. The most common is stock payment which could work in the COVID-19 M&A deal making strategy to bridge the valuation gap between the seller and the acquirer. Deferred payment and earn-outs start to become a popular way to find a compromise in terms of business prospects and projections, which appear to be wider in the COVID era than those in the normal situation. Retention of the purchase price is also in use.

While law firms in Thailand normally do not escrow services and restrictions in service provisions from commercial banks, the use of an escrow account in M&A transactions is commonly proposed by the buy-side. The use of put or call option in partial acquisition transactions for the acquisition of remaining interest at later stage (by discretion or upon the occurrence of triggering events) is also seen, as well as ancillary transitional service agreements, trade mark licences or bancassurance arrangements.

Purchase price adjustments

Closing accounts adjustment still dominates the deal making in Thailand; however, locked box mechanisms are more employed and accepted during the recent years, especially in auction deals. Locked box mechanisms will be used more often as a deal protection provision. 


Conditions precedent will be more heavily negotiated. Broad conditions such as absence of material adverse effects (MAE) will be less accepted in order to ensure the deal certainty or the scope of MAE will be narrowly defined to limited circumstances. In transactions where regulatory clearance, especially merger control clearance, is required as a condition, the hell or high-water provision where the acquirer is required to accept the conditions imposed by regulatory body will be put in place.

Merger control clearance

More emphasis is given to the merger control clearance. Merger control analysis should be done at the initial deal structuring stage, and revisited when the acquirer is identified to determine whether the transaction is subject to the pre-merger approval or the post-merger notification. Merger control clearance should be well planned as it could impact the deal certainty as well as the timeline for transaction completion. This area becomes a key focus for deal making in Thailand since the promulgation of merger control sub-legislation under the Thai trade competition law in 2018. Details of Thai competition law and impact on M&A activity will be discussed in the following section.

Force majeure and termination event

Same as MAE provision, scope of force majeure definition is likely to be heavily negotiated and narrowly defined. Depending on the definition of MAE and force majeure, parties will also negotiate if the MAE and continuity of force majeure could be a termination event and provide the right to walk away as opposed to the ground for non-performance of obligations.

Representations, warranties and limitation of liability

Provision of representations and warranties, as well as specific indemnities, are well accepted. Limitation of liability varies from the scope of warranties, and also type of warranties. Attention has been paid mostly on tax warranties and indemnities as it could impact the financial status of the target. It is common that the fundamental warranties (such as capacity, insolvency and title) will not be subject to limitation. With respect to warranty and indemnity (W&I) insurance, the use is still limited but there is an increasing demand in utilising W&I insurance to facilitate the transactions. Planning for use of W&I insurance should be done at an early stage as there may be processes to be undertaken by the insurer which may impact the timeline of the transaction.

In addition, transactions are likely to be conducted at a fast pace in order to avoid any uncertainties which could interrupt the deals. Due to the traveling restrictions and social distancing policies, physical data room is less used for due diligence purposes. For the same reason, there is an increased use of electronic signatures in the execution process of transaction documentation. In response to anti-trust issues, commercial sensitive information may not be shared directly to business decision makers if the acquirer and the target are in the same industry. Instead, the clean team, consisting of independent advisors or acquirer's personnel who has no direct exposure to the business decision making process, will be set up to analyse and verify commercial sensitive information before consolidating and reporting the relevant aspect of information for the acquirer in generic form.

Regulatory Updates and Impacts on M&A activities

Merger control and unfair trade practice regulations

The merger control regime under the Trade Competition Act of Thailand has been effective since the promulgation of subordinate legislation in 2018 and will continue to be a key issue in M&A transactions, in terms of deal structuring, transaction documentation and execution timeline.

The merger control legislation captures the merger by way of purchasing assets or shares in order to acquire control of policy or management of another business operator. For the asset acquisition transaction, the threshold is the acquisition of more than 50% of the total value of normal operating assets in the previous financial year, while the share acquisition transaction may trigger the merger control requirements if such transaction involves:

  • for companies that are not regulated by the Securities and Exchange Law – the direct or indirect purchase or acquisition of voting shares that results in the total holding of more than 50% of the total voting rights of another business operator; or
  • for companies that are regulated by the Securities and Exchange Law – the direct or indirect purchase or acquisition of shares, warrants, or other convertible securities that results in the total holding of 25% or more of the total voting rights of another business operator.

Merger transactions are subject to pre-merger approval if such merger results in a monopoly or a business operator holding a dominant position using the threshold that will be triggered if the transaction resulting in the acquirer or the target either:

  • having a market share of 50% or more, and turnover of THB1 billion or more in the previous year; or
  • being among the top three business operators with a combined market share of 75% or more, and individually has the turnover of THB1 billion or more in the previous year (except for the business operator that has a market share of less than 10% in the previous year).

Transactions that are not subject to pre-merger approval may be subject to post-merger notification requirements if such transactions can potentially result in a substantive lessening of competition in a relevant market, defined as the merger in which any of the merging business operators' turnover or their aggregate turnover is equal to or more than THB1 billion, but which does not create a monopoly or result in the business operator having a dominant position.

Merger control analysis can be complicated due to how the relevant market could be defined. Also, the concept of a single economic entity whereby multiple business operators having a policy or control relationship would be perceived as a single unit could also affect the analysis when determining the market share or could exempt the merger control obligations if such transactions are deemed internal restructurings.

Failure to obtain merger clearance if required could result in fines and more importantly the transaction being revoked. The Trade Competition Commission could also impose any conditions when granting merger clearance. In 2020, the most noteworthy merger clearance was the approval of the acquisition of Tesco in Thailand by CP Group where certain conditions were imposed. It can be expected that there will be more decisions from the Trade Competition Commission imposing the conditions on merger transactions in concentrated markets.

In addition to the merger control, business operators should pay attention to unfair trade practice behaviours. There are a number of complaints submitted to the authorities and proactive actions and decisions which could impact the conduct of business are anticipated. The authority also issued guidelines for the determination of unfair trade practices in certain businesses, such as fruit wholesaling, franchise and food delivery platforms while the guideline on credit terms is in the public hearing process.

Buyback features for REITs and more flexibility for real estate-backed ICO

Since the first REIT set up in 2014, REITs have been considered tools for real estate developers to raise funds from capital market. Due to the COVID-19 pandemic, the real estate industry has faced difficulties, especially in the hotel sector. The effect will remain in 2021 where the cash flow of real estate operators are limited and the credit line is exhausted. To give more flexibilities in REIT structuring to attract more investors and settlors and to support real estate developers to overcome the short term cash flow problems, the Securities and Exchange Commission of Thailand (SEC) has issued a new REIT notification in February 2021 allowing the REIT to be set up with buy-back "options" or "obligations" at the agreed price and within the agreed period of time.

In addition to the generation of income by renting properties, REIT with buy-back features can generate income by profiting from the buy-back scheme. The buy-back features are expected to provide confidence and attractive return to investors while providing solutions to short term cash flow problems to real estate developers. Offering requirements and information disclosure of the REIT with buy-back features vary from those of the traditional REITs, and are to be further explored by interesting real estate developers and dealmakers.

For the initial coin offering, following the issuance of the notification regulating the real estate-backed ICO in 2020, adding the investors protection mechanism such as trustee requirement, asset threshold and investment threshold and valuation requirements, the SEC further issued the notification, effective on 1 March 2021, amending certain requirements for the offering of real estate-backed ICO to provide investors with more protection while offering dealmakers flexibilities for fundraising. The new notification allows the underlying real estate in ICO process to be in form of either physical asset rights, both ownership and leasehold rights, or shares in special purpose vehicles holding the rights to such real estate where the trustee of the ICO shall hold no less than 75% of total voting shares.

Investment threshold is amended to be more flexible, adding more alternatives to the existing requirement of 80% of total project with the THB500 million investment threshold. The token issuer and the trustee are required to have additional duties in asset management or supervision and investors protection mechanisms including the protection and management of conflict of interest.

Ease of foreign shareholding restrictions

Foreign shareholding restrictions have been key obstacles for foreign direct investment and inbound M&A activities. Nevertheless, there have been developments and efforts from the authorities to ease the restrictions in certain businesses. Starting from 2013, the Cabinet approved the removal of various businesses, especially businesses which require licences from specific government authorities such as securities and derivatives businesses, banking businesses, and insurance businesses from the list of businesses that require a foreign business licence in order to minimise the licensing redundancy, and further removed the business of providing services to affiliated entities. The Ministry of Commerce also proposed in 2020 the removal of three additional businesses, ie, telecommunications, treasury centre and software business, pending approval from the Cabinet. This relaxation, if continued, will attract more investment into Thailand.

Investment promotion from the Board of Investment of Thailand (BOI) has long provided foreign investors, in addition to tax incentives, with foreign direct investment opportunities exempting the foreign business licence requirements. More new categories of promoted business are expected from the BOI which could provide opportunities to eligible foreign operators. Recent additions include the manufacturing of electric vehicles, manufacturing of high energy density storage, geriatric hospitals, elderly centres, international procurement offices, and clinical research.

For the insurance sector, there are good success signs for the approval for the increase of foreign shareholding, currently limited at 25% shares, from the Office of Insurance Commission (OIC) and the Finance Minister. The successful applicant must demonstrate how the foreign shareholder can transfer technology and know-how to the Thai insurer, or make contributions to Thai insurer in terms of financial stability.

New business integration scheme

Business integration between private limited companies recognised under the Civil and Commercial Code of Thailand (CCC) is in the form of amalgamation whereby two entities integrate and disappear, with a new entity being created. The amalgamation, while being widely used, sometimes poses technical problems during the implementation stage. In 2020, the Cabinet approved the amendment to the CCC.

One of the amendments is to add the merger, whereby the merging entity will be merged into the surviving entity that will remain in existence following merger completion, as a new business integration scheme. This scheme, once effective, could be put in use for many M&A activities and internal restructurings.

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Weerawong, Chinnavat & Partners Ltd represents purchasers, sellers, advisers, lenders and financial intermediaries in domestic and cross-border M&A, LBOs and divestments. The firm acts for Thai and international clients on corporate transactions of all kinds, including acquisitions of listed companies, private equity investments and M&A of companies engaged in activities across the full breadth of the Thai economy. It also assists Thai companies on their expansion elsewhere in Asia and around the world. The firm advises clients on acquisition financing, regulatory issues, international tax matters, competition law, IP issues, real estate matters, and labour and environmental issues that involve complex cross-border M&A. For its many private equity clients, the firm adds value through its extensive experience in structuring bids, negotiating and drafting acquisition and financing documentation, and structuring exit strategies for investors.

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Baker McKenzie is one of the largest law firms in Thailand: its corporate and commercial and mergers and acquisitions practice group has more than 20 partners and 80 associates, with strong industry knowledge, assisting Thai and international clients from all sectors and industries in both multi-jurisdictional and domestic transactions. The team has vast experience as trusted counsel, built up over many years, conducting due diligence and structuring M&A transactions, including negotiation and post-deal integration, advising on takeover rules, tender offers, antitrust and competition laws, local regulatory obligations, and joint ventures, among others, and specialises in areas requiring particular focus in Thailand, collaborating seamlessly across all practice groups (including tax, finance, antitrust and competition, employment, compliance, and intellectual property). Baker McKenzie is committed to being an ethical and socially responsible business.

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