Views differ on proposed Demco acquisition of WEH

The proposed share acquisition at the price of Bt190 per share represents 5 per cent of WEH’s registered capital, totalling Bt1 billion. 

Demco’s board of directors and audit committee reviewed the transaction and consider it appropriate and beneficial to the company. However, the company’s independent financial adviser (IFA) recommends that the shareholders not approve the transaction, warning of various investment risks and determining that the acquisition price is inappropriate. The IFA concluded that the WEH share value should be Bt139.47-Bt161.05, but the proposed acquisition price is Bt190 per share. 

The transaction is classified as a related-party transaction and an asset acquisition, because one of Demco’s directors and shareholders is also a WEH director and shareholder. In addition, because of its high value, the transaction requires shareholders’ approval, and it will be proposed at an extraordinary general meeting  tomorrow. 

One of the key factors causing the above difference of opinion on acquisition price is the assumptions used in the calculation of annual energy production, where Demco’s board of directors together with an audit committee came to different conclusions from the IFA. 

In this connection, the Securities and Exchange Commission has advised Demco shareholders to study the information carefully, exercise their rights to protect their own benefits, and seek clarification or explanation from the board of directors and executives so as to have sufficient information to make a decision. 

At least three-fourths of the shareholders attending the meeting and eligible to exercise voting rights, excluding the interested shareholders, must approve the transaction for it to go ahead.