IFA Considers BCP’s Takeover of ESSO ‘Appropriate’

The Independent Financial Advisor issued a report on Wednesday calling BCP’s takeover of ESSO Thailand for more than THB30 billion “appropriate”, and recommending that shareholders should vote in favor of the deal.

Bangchak Corporation Public Company Limited (SET: BCP) announced on January 12 that its Board of Directors approved to acquire the shares and make a tender offer for the entire securities of Esso (Thailand) Public Company Limited (SET: ESSO), one of the leading integrated petroleum refining and marketing companies in Thailand.

BCP will directly acquire a total of 2,283,750,000 ordinary shares of ESSO, equivalent to approximately 65.99% of the total issued shares of ESSO from the seller, ExxonMobil Asia Holdings Pte. Ltd. (ExxonMobil Asia). 

In this regard, BCP is required to make a tender offer for the remaining 1,177,108,000 ordinary shares in ESSO (approx. 34.01% of the total issued shares in ESSO) after the completion of the transaction with ExxonMobil Asia.

BCP expected the purchasing value of the sale shares would be in a range of THB8.84 or THB9.63 per share, making the total value of approximately THB20,198 million or 21,982 million.

Krungthai XSpring Securities Company Limited, as BCP’s Independent Financial Advisor or IFA, has an opinion that the purpose of the transaction is appropriate since it could help BCP expand its business and help it become a leading refinery and marketing operator in Thailand.

In addition, the transaction could help expand the marketing business of the company by optimizing fuel distribution channels and leveraging ESSO’s service stations, which could help the company significantly strengthen its retail market share in terms of sales volume and number of service stations, particularly in prime areas including Bangkok and metropolitan areas. 

With the ESSO’s sizable customer base, the transaction can generate further growth through cross-selling opportunities. From increased service stations, there is opportunity for BCP to further expand its non-oil businesses, such as Inthanin Coffee, Food Trucks, and EV Chargers by utilizing their network. Moreover, it can also create a business synergy to the Company’s operations in the areas of cost optimization from crude supply, refinery operations, logistics, and corporate overhead.

From the above reasons, the IFA has an opinion that shareholders of BCP should approve the transaction.