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On 13 September 2005, the Thai media world was stunned to learn that GMM Media had acquired a 32.32 per cent share in the Matichon group, and a 23.6 per cent share in Post Publishing. GMM Media is part of Paiboon Damrongchaitham's Grammy entertainment empire, a group of companies that dominates the Thai pop music business. Paiboon is a close associate of prime minister Thaksin Shinawatra; many suspected his US$68 million investments were made on Thaksin's behalf, seeking to neutralise two important newspaper voices: that of influential political daily Matichon, and the widely respected English language Bangkok Post. The story has been widely interpreted as another example of Thaksin seeking to tame the media.
But because Paiboon and Matichon founder Khanchai Boonpan were also old friends, the Matichon story was for many Thais primarily a saga of betrayal. The takeover story spoke volumes about Thai attitudes to share ownership. Matichon prided itself on its progressive political image, seeing itself as continuing the struggles of the 1970s. Yet at the height of Thailand's boom in 1989, Khanchai had floated his newspaper group on the stock exchange, becoming extremely wealthy in the process. His progressive fašade was now extremely thin, yet Thai society continued to view him as an idealistic writer rather than a rich businessman.
Rather than retaining a controlling interest in the group for himself, Khanchai sold 75 per cent of the shares - an act of pure greed. He clung to a very Thai understanding of the stock market, believing that because he had founded Matichon, nobody would dare try to subvert his de facto control over the company. For over fifteen years, he was successful in perpetuating effective control of a company he no longer owned, largely because of the gentlemanly understandings that governed Thailand's share market. Under prime ministers such as Anand Panyarachun and Chuan Leekpai, people like Khanchai were seen as untouchable.
With the arrival of Thaksin Shinawatra in Government House early in 2001, the old polite 'rules of the game' were re-drawn along much more ruthless lines. Thaksin had no great affection for a newspaper that had in 2000 exposed his failure properly to declare his assets, a revelation that almost led to his being banned from political office the following year. Under the winner-takes-all culture created by Thaksin, the business world was divided into Thaksin allies and the rest. Leading Thai companies such as Matichon could now face the previously unthinkable - hostile takeover bids. Paiboon bought his stakes from five foreign shareholders who owed no sentimental loyalty to Khanchai.
In the end, a public outcry, petitions, threats to boycott Grammy, and a highly effective campaign by Matichon forced Paiboon to back down in less than a week, reducing his stake to around 20 per cent. Khanchai was obliged to borrow huge amounts in order to buy back shares from Grammy. On the surface, at least, the day had been saved.
WATCHPOINT: Thai tycoons who believe they can control companies they do not own, are not living in the real world of global finance. This may not be the last hostile takeover bid in Thaksin's Thailand.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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