Bangkok--15 Sep--TRIS Rating
TRIS Rating Co., Ltd. today says the company rating of Thai Beverage PLC (ThaiBev) to remain unchanged following the announcement to acquire Serm Suk PLC (SSC), on the back of the company’s strong financial profile and sufficient liquidity to cushion against expected rise in leverage.
ThaiBev had an announcement on 9 September 2011 that Thai Beverage Logistics Co., Ltd. (TBL), its wholly-own subsidiary, has agreed to acquire 110.461 million shares of SSC or a 41.55% stake in SSC’s ordinary shares from Pepsi-Cola (Thai) Trading Co., Ltd. and Seven-Up Nederland, B.V. (Pepsi Group), at the price of Bt58 per share, for a total of Bt6,406.8 million. SSC principally engages in the bottling production and distribution of Pepsi under a long-term contract. SSC also manufactures and distributes other carbonated soft drinks, iced tea drinks, and fruit drinks while being distributor for OISHI green tea and energy drinks. SSC generated sales of Bt21,977 million in 2010 and Bt11,578 million for the first half of 2011.
Following the share acquisition from the Pepsi Group, TBL will make the tender offer to purchase all the remaining shares held by SSC’s shareholders, taking place from 15 September to 19 October 2011. The total investment for a 100%-share acquisition, if achieved, will be around Bt15,422 million. The acquisition will be mostly funded by debt which ThaiBev has enough loan facilities available to bridge finance the transaction.
After the tender offer, ThaiBev is likely to have a control over SSC through at least 41.55% from the Pepsi Group and another 32.62% stake of SSC held by its alliance, SS National Logistic Co., Ltd. The contract SSC has with the Pepsi Group, which will expire in November 2012, is not yet certain to be renewal. ThaiBev’s distribution network incorporated SSC’s facilities could be the most extensive in the country. ThaiBev has a good potential to grow its product portfolio, especially non-alcoholic beverages, in the future.
TRIS Rating said, the debt financing investment will slightly weaken ThaiBev’ts financial strength. The debt to capitalization ratio is expected to increase, though acceptable, to the level of 25%-30%, compared with the current level at 17% as of June 2011.
ThaiBev is the largest alcoholic beverages producer and distributor in Thailand. Its business also includes non-alcohol beverages and food segments. ThaiBev is currently assigned a company rating at “AA” with a “stable” outlook by TRIS Rating.