The process of Mergers and Acquisitions may seem complex. It is essential to first understand what is involved in a Merger and Acquisition. Despite the fact that these terms are usually described together, they do not mean the same thing, therefore it is essential to determine the meaning of Merger and separately to discuss the meaning and definition of an acquisition.
A Merger can be defined as the merging of two companies within their interest that the companies feel is best for both companies, in order to forfeit one another’s shares and to form new shares of the newly formed company while maintaining the liabilities and responsibilities of the companies combined. The companies that are merged are then considered to be dissolved. To create a merger between two companies is for both companies to be of the view that shareholding of the newly formed company will obviously be above and beyond what was consisted in the two companies individually. This process in Thailand is not very common due to the fact that there are various tax implications involved and complications regarding shares and assets into the new company.
An acquisition is where one larger company takes over a smaller company for the purpose of combining the two companies to excel in their fields of interest and business. An acquisition of companies is usually not that common in Thailand and is called an Amalgamation which is one and the same. This can be acquisition of shares and/or assets. With regards to taxes in general, once an Amalgamation or an Acquisition is taken place, the newly formed company will not be responsible for corporate taxes or capital gains taxes as this transaction would not be considered a transaction for profit, but merely the acquiring of the assets of the smaller company.
Prior to such acquisitions there are various things that need to be considered in details such as the amount of shares in each company, or rather the smaller company, the taxes involved in the assets and the value of those assets, the corporate taxes payable if any, the capital of the company, and also share values if acquiring shares.
Since there are no specific governed laws that govern Mergers and Acquisitions specifically, they are merely governed by the Civil and Commercial code if the merger or acquisition has to do with a private limited company and governed by the Public Limited Company Act if it consists of a Public Limited Company. Additionally Public Limited Company Mergers will also consists of the Securities Exchange Act, and also the Securities exchange Commission Act, and may also consist of the Stock Exchange of Thailand act as the shares of the public limited company may be listed.
It is imperative to understand that prior to merging of two companies, or even an acquisition, to understand the background of such companies and to ensure that this is indeed what is best for each individual company. For this reason, we at Juslaws & Consult, there are a variety of services we offer in relation to a Merger or an Acquisition which are including but not limited to:
Due diligence- company background, shares, shareholders, capital and registration, etc
Negotiations/Pre-Negotiations- to determine the right way and structure for the Merger or Acquisition.
General Advice and Consultation- on propositions in relation to Mergers and Acquisitions.
Please contact us today to receive General consultation and advice on how to proceed with a Merger or Acquisition.
Since our Bangkok establishment in 2004, Juslaws & Consult have represented public listed corporations and middle size companies in the process of Mergers and Acquisitions of companies, assets, shares, factories and properties in Thailand in sectors including banking, energy, and food and beverage among others.
Juslaws & Consult has consistently been rated as a Top Tier firm for M&A by leading legal directories, and you can often find our lawyers speaking in local and international seminars, or publishing articles in specialized legal and business magazines such as The Report of Thailand by Oxford Business Group in 2015 and 2016. Our Thai and International lawyers and accountants in our Corporate Department have handled the following cases in Thailand and abroad:
Acquisition of a public listed Thai-German Ceramic company in 2006 with main business in the Ceramic tiles industry.
Merger of a Japanese and Thai public listed air conditioning companies in 2010
Acquisition of the sixth-largest bank (in assets) in Thailand by a Canadian bank in 2010
Acquisition of shares and Purchase agreement for one of Thailand’s oldest insurance companies whose Thai majority owner, an old Chinese-Thai tycoon family, sold their shares to their Japanese co-shareholders. The transaction had a value of 13.3 million USD inn 2012
Assisting a client from East Europe on a joint venture and acquisition of a cement factory in Mauritania in 2013.
Due Diligence on an Acquisition of a land of 20 rai in the island of Koh Lanta in 2013.
Negotiation and Acquisition of a Thai middle size manufacturer and distributor of joints and gaskets for industrial use by a British investment holding as a strategic market entry in Southeast Asia in 2014.
Advice on an Acquisition of a hotel-resort in Spain by a well-known public listed company from Malaysia with a value of 50 million euro in 2014.
Advice a foreign client on the acquisition of a real estate asset consisting in villas and residential in 2014.
Advising on an acquisition of a mine in north of Chile and the participation in an Oil and Gas project with a value of 2 million Singapore dollars for an oil and gas company registered in Singapore in 2015.
Assisting on the takeover of Thai IT Company with a value of 20 million Thai baht in 2015.
Legal support of the transfer of property assets with a value of 300 million Thai Baht in 2015.
Advising on an Acquisition of all the shares of a Thai company that owned a 2.5 billion Thai baht hotel by our client a Singaporean company during 2016 in Phuket.