BDMS: Taking Over BH to Pave the Way for a Mixed Marketing

The decision made by Dr. Prasert Prasarttong-Osoth last week had drawn a lot of attention in the equity market once the statement from Bangkok Dusit Medical Services Public Company Limited (BDMS) was submitted to the Stock Exchange of Thailand to announce a tender offer for all shares in Bumrungrad Hospital Public Company Limited (BH).

 

The move to get full control in BH might due to his earlier disappointment  take control of Ramkhamhaeng Hospital Public Company Limited (RAM)

Taking full control in BH might be Dr. Prasert’s “Plan B” after the disappointment from trying to manage Ramkhamhaeng Hospital Public Company Limited (RAM), opposed by RAM’s major shareholders. Failing to do so, BDMS, in 1Q19, made a decision to sell all stake of RAM (38.24%) to four major investors at a value of ฿2,800/share, totaling 12.8 billion baht.

 

Sadly, the path to taking over BH may not be easy as BH’s major shareholders, led by “Sophonpanich Family”, said that they would not hand over their stakes to BDMS.

The news of tender offer for BH had also reached the Office of Trade Competition Commission (OTCC), which stated that BDMS must get approval before processing the tender offer due to the move could lead to a monopoly.

How will the related state department take action on this matter? And whether Dr. Prasert will shift to 1st gear or reverse are the matters that investors must wait and see.

However, if BDMS is able to takeover BH, it will finally create a synergy between Bangkok Hospital’s chains and BH. There has yet been any deal like this one.

 

The deal will complete the hospital business by reaching every customer type. For the premium market, the company has Bangkok Hospital with specific specialties. Meanwhile, BH will focus on international customers and BDMS Wellness Clinic can take care of customers who need healthcare.

As for a high-end market, there are Phyathai Hospital and Samitivej Hospital for general treatment. For the mid and low market as well as social security system users, BDMS also has Paolo Hospital for the job.

 

More importantly, there could be mixed marketing happening from this synergy. What kind of mixed marketing? For example, a foreign customer who fly with Bangkok Airways, operated by Bangkok Airways Public Company Limited (BA), may have a special shuttle bus to the hospital in the group or a healthcare center of BDMS Wellness Clinic, not to mention a discount or special package are also possible.

The marketing will be much easier while the group can also increase their value to another level.

 

This could be the move carefully placed on the board by Dr. Prasert. The takeover is also an ordinary phenomenon in the market: big fish eat small fish. However, in this context, the small fish does not seem to be easily eaten by the bigger fish. When this happens, what will be the bigger fish’s next move?