January 22, 2015 / 9:27 AM / 3 years ago

UPDATE 1-Thai subway, tollway operators to close $2.4 bln merger in Q3

* Merger will boost revenue growth, enhance expansion

* Ch Karnchang to hold 30 pct in new entity

* CK shares at 11-year high, BMCL down 8 pct, BECL up 5 pct (Adds comments from companies, analyst, details on deal)

By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK, Jan 22 (Reuters) - Thailand’s Bangkok Metro PCL and Bangkok Expressway PCL said on Thursday they expect to complete a merger in the third quarter of 2015, a deal that would create Southeast Asia’s third largest rail and road operator by market value.

The merger of subway operator Bangkok Metro and tollway operator Bangkok Expressway is part of a restructuring at Thailand’s second-largest construction contractor Ch Karnchang PCL, the founder and majority shareholder in both firms.

Bangkok Metro (BMCL) and Bangkok Expressway (BECL) said late on Wednesday the merger would involve a share swap deal and would create a new entity with an estimated market value of 78.4 billion baht ($2.4 billion).

That would make it the third largest transport operator in Southeast Asia after Singapore’s Comfortdelgro Corp and Thai skytrain operator BTS Group Holdings, which has a $3.8 billion market value.

Analysts said the merger would better equip both firms to expand at home and in the region.

“BECL has strong balance sheet but only limited investment opportunities, while BMCL needs to expand its financial capacity to fund its future investment plans,” Chaiyatorn Sricharoen of Bualuang Securities wrote in a research note.

The merged entity will have a combined revenue of 11.7 billion baht in 2015, up 3.4 percent year-on-year, and revenue is expected to rise 12-15 percent in 2016, Payao Marittanaporn, managing director of Bangkok Expressway, told reporters.

Founding firm Ch Karnchang, which owns a 30.2 percent of BMCL, plans to retain a similar stake in the merged entity, she added.

Ch Karnchang shares rose to an 11-year high in early trade. The stock has since pared gains to trade 7.5 percent higher at 28.25 baht at 0850 GMT. BMCL shares fell 8 percent, while BECL jumped 4.7 percent after the merger plan was announced.

Loss-making BMCL has operated the 20 km (12 mile) underground train system in the capital since 2004 and has a 30-year concession contract to operate the 22-km Purple line, which is under construction and due to open in August 2016.

BMCL Managing Director Sombat Kitjalaksana told reporters the company planned to wipe out its 300 million baht accumulated losses before the merger is complete. That will enable the new entity to start paying dividend on its 2015 performance.

$1 = 32.60 Baht Writing by Khettiya Jittapong; Editing by Muralikumar Anantharaman and Miral Fahmy

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