Tough competition has forced British Oxygen Company Ltd (BOC) Ð the only foreign investor in the Thai cooking gas market Ð to withdraw, selling its Unique Gas and Petrochemical Plc to Siam Gas Industries Co for 2.17 billion baht (US$1=39 baht), the Bangkok Post reported.
With the acquisition, Siam Gas will double production capacity of liquefied petroleum gas (LPG) to 57,000 tonnes to become the country’s second largest gas distributor after PTT Plc.
Other foreign investors Ð Esso, Shell, and Caltex Ð have exited the Thai household cooking gas market, but have continued to distribute industrial gas and liquefied petroleum gas (LPG).
With the Unique Gas sale, there are only four active household cooking gas distributors left in Thailand Ð PTT Plc, Siam Gas, Sangthong Gas and Picnic Gas.
Picnic Gas took over World Gas from SHV Gas NV Group in a deal valued at US$28 million recently.
Unique Gas managing director David Shaw said it was difficult for newcomers to make inroads in the home cooking gas business because the government requires companies to make minimum sales of 50,000 tonnes per year.
The high capital investment to purchase gas and containers, along with the marketing costs, prevented small distributors from grabbing a share of the market, he said. BOC acquired Unique Gas from Thai Industrial Gas Plc in 2002 and delisted it from the Stock Exchange of Thailand that year.
Siam Gas president Worwit Weeraborwornpong said that as a result of the purchase, the company would change its name to Siam Gas and Petroleum Co.
To help fund the buy-out, Siam Gas borrowed 800 million baht, taking its total outstanding debt to 4.8 billion baht. It expects the investment in Unique Gas to break even in four years.
With the latest purchase, Mr Worwit expects to boost Siam’s market base in the northern and southern provinces of Thailand, where Unique Gas had a strong foothold.
The acquisition puts the company in a stronger bargaining position against gas vendors should it need to import LPG next year. This will become an important consideration if the price of the gas begins to float freely on the market as scheduled, he added.
During the first 10 months of this year, Siam Gas, together with Unique Gas, sold a total of 528,737 tonnes of LPG which accounted for 24.77% of the domestic market. In comparison, PTT held a market share of 45% and Picnic Gas 21.27%.
Siam Gas expects to post a net profit of 500 million baht to 600 million baht this year and 10% growth next year, the Bangkok Post reported.