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Thailand's TMB Bank, Thanachart Bank sign merger agreement

Thailand's TMB Bank PCL entered into an agreement to merge with Thanachart Bank PCL to create the country's sixth-largest commercial lender with approximately 1.9 trillion baht of assets.

Under the agreement, TMB Bank will acquire 6,062,438,397 shares in Thanachart Bank, or a 99.96% stake, from Toronto-based Bank of Nova Scotia and Thanachart Capital PCL, according to separate Aug. 9 releases. Scotiabank had earlier agreed to reduce its stake in Thanachart Bank in exchange for cash and shares in TMB Bank. The total consideration for the sale is expected to range between 158.35 billion baht to 158.41 billion baht.

TMB Bank said it will also acquire the remaining 2,423,773 shares of Thanachart Bank held by minority shareholders.

Following the share sale, Thanachart Bank units, Thanachart Fund Management Co. Ltd. and Thanachart Broker Co. Ltd., will be transferred to TMB Bank. Of which, Thanachart Bank's 75% stake in Thanachart Fund Management will be disposed to a third party, according to the release.

To finance the merger, TMB Bank will issue up to 27,622,837,416 newly issued ordinary shares at 95 satang apiece to Thanachart Bank shareholders.

Prior to the merger, Thanachart Capital and Thanachart Bank will carry out a business restructuring to separate certain financial businesses from the bank.

Subject to relevant regulatory approvals, the merger is expected to be completed by December, while the consolidation is expected to be completed within 2021. Thanachart Capital will be issued up to 21,663,091,024 new ordinary shares, accounting for between 20.1% to 23.3% of the total outstanding shares of TMB Bank; and, up to 5,926,197,357 shares, accounting for between 5.6% to 6.4% of the total outstanding shares in TMB Bank.

Following the merger, ING Groep NV is expected to own a 21.3% stake in TMB Bank. Thanachart Capital will own about 20.4% of the bank; Thailand's Ministry of Finance will hold an 18.4% stake, while Bank of Nova Scotia and minority shareholders will own 5.6% and 34.3% stakes, respectively.

In February, the two Thai banks entered into a nonbinding agreement for a potential merger.

As of Aug. 8, US$1 was equivalent to 30.76 Thai baht.