PTT (PTT) Pcl, Thailand’s biggest company, offered S$1.2 billion ($959 million) for the rest of Sakari Resources Ltd. to add energy coal assets in Indonesia, giving the target the biggest gain in almost six years.
State-controlled PTT offered S$1.90 a share for Singapore-based Sakari through its PTT International Co. unit, the Bangkok-based company said today in a statement. The bid, which valued the target at S$2.2 billion, sent the shares up 28 percent to S$1.905. PTT already owns a 45.3 percent stake in Sakari, according to data compiled by Bloomberg.
Buying Sakari would give PTT control of two mines in Indonesia and a Singapore-based trading company after a slump in coal prices depressed values. PTT, which this year made the nation’s biggest overseas energy takeover through its publicly-traded PTT Exploration & Production Pcl (PTTEP) unit, plans to invest 720 billion baht ($23 billion) over the next five years as it adds assets.
The nation’s energy reserves in the Gulf of Thailand are “not sufficient to meet the rapidly growing domestic demand, hence the interest in overseas assets,” said Tony Regan, a consultant with Singapore-based Tri-Zen International Ltd. “The chairman seems to have a mandate to spend really quite a lot of money on overseas acquisitions.”
Sakari surged 28 percent to S$1.905 at 1:53 p.m. local time, the most since Nov. 3, 2006.
The bid values Sakari at 8.8 times earnings before interest and tax compared with an average of 17 times for 10 comparable deals collated by Bloomberg. The value of coal deals globally this year has dropped to $12 billion, with an average premium of 19.6 percent. That compares with total value of $39 billion last year at a 20.2 percent premium.
The bid implies a value of $12 a metric ton for Sekari’s coal reserves, Bualuang Securities Pcl said today in a note. The scope for upgrading production and reserves means the price is “reasonable,” Bualuang said in the note.
“Coal represents an important long-term diversification strategy and growth opportunity for PTT,” the Thai company said in the statement. Coal sales accounted for 1.2 percent of PTT’s sales last year, according to data compiled by Bloomberg.
Coal generated about 20 percent of Thailand’s electricity last year, compared with 67 percent from natural gas, according to the Energy Ministry.
Chatchawal Eimsiri, acting president of PTT International, didn’t answer four calls made to his office in Bangkok today. Chatchawal is responsible for PTT’s coal businesses.
PTT, which owns 65 percent of PTT Exploration, completed the purchase of Straits Resources Ltd. (SRQ)’s Indonesian coal assets for A$544 million ($565 million) in March last year. Benchmark prices for thermal coal at Australia’s port of Newcastle have declined 21 percent since the start of the year.
PTT and its major affiliates account for about a fifth of the value of Thailand’s benchmark SET index. The company is seeking to acquire new oil and gas reserves and secure LNG imports as it aims to supply half of Thailand’s daily energy demand by 2020, up from 15 percent now, it said in March.
PTT Exploration added gas assets in Mozambique’s Rovuma Area 1 through its acquisition of Cove Energy Plc. The bid, which valued Cove at 1.2 billion pounds ($1.9 billion), had achieved acceptances from 97.8 percent of Cove holders as of Aug. 24.
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