Mergers and Acquisitions

The terms, Merger and Acquisition, are often used interchangeably or that one is confused over the other. However, the difference between the two is as glaring as it can get with one referring to the purchase of a company on another (Acquisition) and the other one refers to the combination of two business entities (Merger).

The services of a reputable corporate lawyer or a law firm with extensive background in corporate law may be needed as the process of acquisition in Thailand can really be very complicated.

Normally, acquisitions in Thailand involves four (4) stages.

1. The involved companies will move to come into a Memorandum of Understanding or Letter of Intent where both binding and confidentiality terms will be reflected.
2. The purchasing company would then do due diligence to check various concerns with regards to the company to be bought i.e. status of business, properties it owns and financial situation among others.
3. When the due diligence work is done, the companies involved will then go through the process of negotiation wherein what the due diligence work has uncovered will also be included in the discussion.
4. If both parties reach an agreement, they will then prepare the Sales and Purchase Agreements plus other pertinent documents. These will be signed and affixed with company seals and then validated per Civil and Commercial Code prescription.

On the other hand, the process involved in a merger can be summarized through the following descriptions.

1. The merging companies will each call for shareholders’ meeting wherein a special resolution of the merger should be reached. The vote should not be lesser than ¾ of the total shares basing on the shareholders present at the meeting.However, 14 days before the date of the said shareholders’ meeting, notices must be sent to each company’s’ shareholders by way of mail and local newspaper.
2. After both shareholders of both companies reach their resolutions, each of them will have to register their special resolutions not more than 14 days after they were passed.
3. Both companies will then individually advertise their intentions to merge with the other through a local newspaper. This should be done at least once.
4. Both companies will individually send registered mails to their companies for possible opposition of the merger. This should be done within 60 days.
5. When the 60-day deadline for the company notifications lapses, shareholders of both companies will then have a single meeting to settle the details of the recently merged companies.
6. This newly merged company should then be registered within 14 days after the resolution to merge has been approved.