BANGKOK • King Power, the Thai duty-free conglomerate, has bought a US$225 million (S$305 million) stake in Thai Air Asia, the country's largest budget airline.
The purchase allows King Power's billionaire owner Vichai Srivaddhanaprabha to further tap into Thailand's booming tourism industry and expand beyond his duty-free and hotel portfolio.
Thai Air Asia is 55 per cent owned by Asia Aviation, a Thai company, with the rest held by the Air Asia group founded by Malaysian entrepreneur Tony Fernandes.
King Power's purchase of 39 per cent of Asia Aviation from its chief executive (CEO) Tassapon Bijleveld makes it the second largest shareholder of Thai Air Asia.
Mr Bijleveld, who also serves as Thai Air Asia CEO, will keep 5 per cent of the shares and stay on as chief executive of Asia Aviation, King Power said in a statement yesterday, with the rest of Asia Aviation's stock owned publicly.
King Power CEO Aiyawatt Srivaddhanaprabha yesterday said the purchase represents new business opportunities.
The group will join forces with Thai AirAsia to expand its distribution and retail business, he said.
The King Power statement also said it was able to snap up the shares at a price "substantially lower" than the market rate because local airlines must legally be more than 50 per cent owned by Thais.
"Given the restrictive nature of such rules, there are only a handful of Thai individuals who, realistically, would be interested in and could afford the purchase," it said.
Polo-loving Mr Vichai, 58, has carefully navigated Thailand's treacherous political waters of recent years, while taking his King Power empire from strength to strength.
He has built an estimated fortune of US$2.9 billion since establishing the firm in 1989 - starting with a single shop in Bangkok.
He hit the jackpot in 2006 when King Power won a monopoly duty- free concession at Bangkok's cavernous new Suvarnabhumi airport, and with it a captive market of tens of millions of travellers.
He has since gone on to buy British football club Leicester City, which made history when it won this season's Premier League.
Last year, Thai Air Asia carried 14.8 million passengers, and it plans to serve 16.9 million this year. It has said it wants to expand in markets across South-east Asia, China and India.
King Power said it plans to spend 12 billion baht (S$461.5 million) on buying the remaining 60 per cent of Asia Aviation.
Mr Vichai's group is required to make a mandatory offer for Asia Aviation shares it does not already own, the company said on Monday.
Before the sale, the Thai management had a combined 45 per cent of Asia Aviation.
AGENCE FRANCE-PRESSE, REUTERS