Yesterday both the shares of WHA and HEMRAJ were suspended/halted from trading by the SEC on the news that an M&S may potentially take place with WHA’s CEO saying it would be with a company of a THB 50 bn market cap. 

So why no deal?

Both shares resumed trading today with both HEMRAJ and WHA releasing announcements that it was involved in no such talks and the result of this is that the companies cannot reverse its denial for the next six months.

What could the deal have looked like?

Publicly the WHA CEO, K. Somyos, disclosed a plan to take over a listed industrial estate company that has been in the the market for 20 years and with a market capitalisation of THB 50 bn, and that the deal could be partly funded by a capital increase equivalent to 25-30% of the existing capital base, once the SET heard this they had immediately halted trading on both stocks.

When looking through WHA’s balance sheet you can easily see that leveraging up on debt alone wouldn’t have been possible b/c they are already nearly @ 1x D/e with an equity base of THB 3.5 bn. Even with their upcoming sales to REITs the only way possible to fund this would be to raise at least THB 20 bn in new equity (note: their market cap today is THB 37bn so you’re looking @ a sizeable increase) and fund then potentially fund the rest with debt.

Why HEMRAJ?

i have said it time and time again they are the best managed industrial estate company in Thailand today, they are the largest, they have great investments in utilities that now account for 1/2 their net profit, AMATA would never sell because the family wouldn’t have anything else to do, TICON – a maybe but if they had talks then perhaps Rojana (their major shareholder) wasn’t happy with the price; ROJANA – well see Ticon, most likely on price, TFD – too small, NNCL – too small. Now I don’t quite understand why HEMRAJ would sell to WHA, I see the value that WHA can gain but HEMRAJ? Unless the price was absurd I still can’t quite figure it out just yet.

Any numbers?

Sure here are the basics.