Thailand
Bangkok Glass turns to M&A strategy to lower risk
Bangkok Glass, part of the Boon Rawd Brewery owned by the billionaire Thai family Bhirom Bhakdi, wants to focus more on mergers and acquisitions (M&A) this year and increase investment weight for construction material to diversify business risk.
Pavin Bhirom Bhakdi, the company’s president and director, said the company is set to invest about 5 billion baht this year, 60-70% of which will go into the construction materials segment, with the remaining 30-40% will be used to expand the company’s packaging business in Vietnam via M&As or joint ventures with local partners.
“We are increasing our investment in construction materials to mitigate the risk of heavy reliance on the packaging business,” he said. “The market size for construction materials is very big and profitability is much higher than in packaging.”
Mr Pavin said the company branched out to construction materials once in the past three decades ago, but halted efforts after a few years.
“We’ve restarted this business over the past two years with the aim of positioning it as one of three pillars for the company this year,” he said. “Our expansion in construction materials will be made through partnerships or M&As instead of green fields [starting from zero].”
In addition to the M&A strategy, the company will also import construction materials to test the market before establishing its own factory, said Mr Pavin.
The company’s construction materials are mainly aluminium and floating glass products, generating sales of 2 billion baht last year.
Bangkok Glass expects construction material sales to double to 4 billion baht this year, contributing 25% of the company’s total revenue this year, up from 20% last year.
“There is huge potential for the construction material business and I expect our sales to reach 6 billion baht by 2020,” Mr Pavin said.
To support the future expansion of the construction material business, the company plans to list BG Float Glass Co, which handles the construction material business, on the Stock Exchange of Thailand within the next 3-5 years.
“The listing, initiated by our group’s boss Santi Bhirom Bhakdi, aims not only to raise proceeds but also build our reputation via transparent management,” Mr Pavin said.
Bangkok Glass Group’s sales are expected to increase to 17-20 billion baht this year after contracting by 4% last year on lower demand for packaging products for alcohol, soft drinks and food. The key drivers are packaging, construction materials, alternative energy, and sports products.
Source: https://www.bangkokpost.com/business/news/1617334/bangkok-glass-turns-to-ma-strategy-to-lower-risk