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Thailand’s economy has strengthened and improved over
the past 3 years, led by manufacturing exports and tourism,
with an estimated GDP growth of 3.9% in 2017 and reaching
an approximate value of USD 423 billion - the highest since
2012.
According to the Bank of Thailand, this trend is expected
to continue in 2018 with a GDP growth forecast of 4.2%
fuelled by several factors including solid growth in the major
economies, the global uptrend in IT spending and moves by
many Asian companies shifting manufacturing operations
to Thailand.
Thailand is known as a manufacturing-driven economy
contributing to 27% of GDP in 2017, followed by household
consumption (16%) and agriculture (8%), respectively.
Macroeconomic performance has shown positive signs
of recovery with strong growth in agriculture and exports
in the past years despite the fact there has been political
uncertainty, especially now as the Government is pushing
back elections from November 2018 to February 2019.
With strong historical economic performance, increase in
private investment, and higher government expenditure
in major infrastructure development, most domestic and
foreign companies in Thailand have continued growing
their business through M&A to improve productivity and
maintain business growth.
However, this type of private investment has less impact to
GDP compared with investments in new fxed assets. The
reason being is that it mainly contributes to the transfer of
ownership of stocks or assets without signifcant spending
on new assets. Additionally, this trend is expected to carry
on with a bigger value of deals over time from 2018 onwards
to seize domestic and overseas business expansion
opportunities.
Source: Standard & Poor’s Global Market Intelligence
Thailand’s service companies and manufacturers have shifted investment from new fxed assets to M&As -
domestically and internationally - to boost their productivity, addressable markets, customer base, increase top
line as well as enjoy lower interest rates in other foreign countries.515340
350
360
370
380
390
400
201520162017
Va
lu
e
Vo
lu
m
e
Thailand M&A Overview, 2015-2017
Volume (Deal) Value (USD Billion)
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2016: THAILAND’S PRIME YEAR FOR M&A DEALS
In 2017, Thailand’s M&A activities were valued at USD 12.7 billion and comprised of 357 deals in total, representing a 19%
decrease from 2016 which had a value of USD 15 billion. Notice that closed deals in 2016 were signifcantly higher when
compared to 2015 (USD 7.9 billion) and 2017 (USD 3.8 billion). The sharp rise in 2016’s transaction value was partly the result
of the USD 6.2 billion mega-deal between Casino Group and
Beri Jucker to acquire Big C Supercenter. It was the biggest
deal in Thailand and Southeast Asia in that year.
Over the same period, average transaction size increased
by 21% from USD 39.7 million in 2015 to USD 48.2 million
in 2017. Meanwhile, value transactions larger than USD
400 million increased by CAGR 5.5%. The signifcant rise in
share of capital spending on M&As over the past decade
has indicated growing appetite of Thai frms to secure more
deals - although the number of transactions were seen to
decrease in this period.
According to Business Sentiment Index (BSI), business
confdence in Thailand has been volatile since 2015 but
is slowly recovering in 2017. Hence, the M&A volume and
value could have been higher with regard to expected BSI.
6.8
11815.1
12.72610142015 2016 2017
Thailand M&A Deal Size by Value, 2015 - 2017
USD = 0.4 Billion USD < 0.4 Billion
0%
20%
40%
60%
80%
100%
201520162017
Thailand M&A Value by Status, 2015-2017
Announced Closed Cancelled
Source: Standard & Poor’s Global Market Intelligence
40
45
50
55
60
01/2003/2005/2007/2009/2011/2001/2003/2005/2007/2009/2011/2001/2003/2005/2007/2009/2011/20Business Sentiment Index (BSI)
BSI
Expected BSI
Index = 50 indicates that business sentiment remains stable.
Source: Bank of Thailand (BOT)
040
60
80
100
120
140
2015-17 2018-10 2011-13 2014-16
USD Billion
Long-term Capital Spending of Thai listed companies
Investment through M&A Investment in new xed assets
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Looking forward, Thailand’s outward investment through
aggressive merger and acquisition is on the rise. Heavyweight
Thai companies such as Thai Beverage (ThaiBev), Indorama
Ventures and Thai Union Group, have all allocated their
budgets in M&A overseas despite the fact that traditionally
the Thai M&A market has been more inclined towards
domestic and inbound investments.
Strategically, outward investment makes sense for companies facing a slower consumption growth, but in the case of Thai
companies, we also see those having a critical mass andknow-how of recognized brands trying to take market share in the
region to beneft from ASEAN emerging economies. Taking this approach not only allows the Thai heavyweight companies to
diversify their risks, but also enable the companies to leverage the skills and resources obtained overseas to improve their
overall operations as well as to stimulate technological and managerial capabilities.
CONSUMER SECTOR TO DRIVE
MORE M&A ACTIVITY IN THE
FUTURE
WE EXPECT WITH THE FURTHER INTEGRATION OF THE
ASEAN ECONOMIC COMMUNITY (AEC), THERE WILL BE
A WIDER RANGE OF ACCESSIBLE TARGETS STIMULATING
BOTH INBOUND AND OUTBOUND INTRAREGIONAL
CROSS-BORDER ACQUISITIONS.
Source: Bloomberg Note: USD 1 = THB 35。