Approval granted for merger of Bangchak and Esso
The Trade Competition Commission of Thailand (TCCT) on Monday approved the proposed merger of petroleum companies Bangchak Corporation (BCP) and Esso (Thailand).
The deal was approved with the condition that the merger does not affect existing trade partners of Esso, said a news source familiar with the matter.
In January this year, BCP informed the Stock Exchange of Thailand that its board of directors had approved the acquisition of a 65.99% stake worth 55 billion baht in Esso Thailand mainly from ExxonMobil Asia Holdings Pte. The deal is expected to be completed in the second half of this year.
BCP filed a proposal with the TCCT to deliberate on the deal in April, after which a subcommittee was formed to evaluate the impact of the merger on the economy, consumers, oil retailers and refiners.
The subcommittee also considered competition in the markets for BCP and Esso products, which include liquefied petroleum gas (LPG), motor gasoline, jet fuel, diesel, fuel oil, and asphalt.
The source said the TCCT’s subcommittee ruled that the merger would not obstruct fair trade competition in the petroleum industry, nor cause severe negative impacts to customers and stakeholders, since the price structure of fuels has been supervised by the government.
Chaiwat Kovavisarach, group chief executive officer and president of BCP, said that the TCCT’s approval of the merger came in the timeframe that the company expected. BCP will now hold discussions with financial institutes to secure the funds for the acquisition, which will start in August, he said.
BCP estimates that the merger will increase its fuel stations to 2,145 nationwide, 1,343 of them BCP’s and 802 Esso’s. This will drive the company’s market share of the fuel station market to 7.7% but still leave it in fourth place behind unbranded stations (70.9%), PTT Oil and Retail Business (8.5%) and PT Energy (8.0%).
Meanwhile, the company’s market share in ready-to-use oil will increase to 21.4%, putting it in 2nd position following PTT OR ,which has a 39.6% market share. Thai Oil and Shell are in third and fourth positions with 7% and 6.7% market share, respectively.
BCP expects to change all logos of Esso’s fuel stations to Bangchak starting late this year and estimates it will take around 2 years to complete the change.
