Fitch Ratings-Bangkok-20 November 2015: Tipco Asphalt Public Company Limited (TASCO: A-(tha)/Stable) is poised to strengthen its market position in Vietnam and Indonesia via a planned acquisition, Fitch Ratings (Thailand) Limited says.

On 13 November 2015, TASCO’s board of directors approved the acquisition of five companies from Colas S.A., which holds 32% of TASCO, for a total value of USD61.8m (or about THB2.2bn). The transactions include acquiring asphalt businesses in Vietnam and Indonesia that will bring its total asphalt manufacturing plants to 41, and increasing its owned logistics fleet to nine shipment vessels and 393 trucks.

TASCO said that the acquisitions will increase its asphalt sales volume by about 290,000 tonnes a year and help expand its market shares in Vietnam and Indonesia. The acquisition is in line with TASCO’s strategy to become a global integrated asphalt and petroleum-related product company.

Fitch views that the total value of the transactions is manageable, relative to Fitch’s forecasted EBITDA for the company at THB4bn-THB5bn a year in 2015-2016. The impact of the acquisitions on the company’s debt should not be significant as the company plans to fund the acquisitions mainly via internal cash flow generation.

The transaction is not transformational nor is it considered significant enough to have a near-term rating impact, and it is therefore not expected to change TASCO’s ratings or Outlook. Fitch expects leverage, as measured by FFO-adjusted net leverage, to increase by around 0.2-0.3x due to the acquisition.

TASCO expects the transactions to be approved by shareholders in its Extraordinary General Meeting in January 2016 and targets for the deal to be completed by 1Q16.


Pakorn Cheewajaroenkul, Associate Director, +66 2108 0162

Fitch Ratings (Thailand) Limited