Siam Commercial Bank (SCB), Thailand's oldest lender, announced on Aug 25 the collapse of its acquisition offer for 51% of the shares of Bitkub Online Co (Bitkub) from Bitkub Capital for 17.8 billion baht, citing regulatory issues.
The deal was announced in Nov 2021 with SCB Securities Co (SCBS), a subsidiary of SCB X, to be responsible for the transaction, which was part of the group's major digital strategy. SCB X, which holds 99.06% of SCB, emerged in Nov 2021 after the bank transformed its business from a commercial bank to a more flexible holding company.
Bitkub, founded by Jirayut Srupsrisopa in 2018, achieved unicorn status following the initial announcement of SCB X's acquisition, which valued its 51% stake at over $500 million.
In addition, the price of Bitkub's KUB coin reached 580 baht when the proposed takeover was announced as the market believed the deal would help Bitkub significantly expand its related digital asset business, such as the development of blockchain technology in partnership with others.
BO, a subsidiary of Bitkub Capital Group Holdings, remains the largest player in the market with a share of more than 90%, followed by Zipmex Thailand. Other players are smaller digital exchange platforms such as Satang Pro, Upbit, and Z.ComEX.
The cancellation of the deal followed months of uncertainty surrounding the proposed takeover while the Securities and Exchange Commission (SEC) stepped up regulatory efforts over digital currencies which are considered to be high-risk assets. Meanwhile, the prices of digital assets continued to slide amid unfavourable global market conditions such as the collapse of several exchanges.
For example, the SEC fined Samret Wajanasathian, chief technology officer at Bitkub Blockchain Technology, for allegedly using inside information to buy KUB coins in relation to SCB's attempted acquisition of BO. The regulator also fined Singapore-based Zipmex for two breaches of the Digital Asset Act by suspending all or parts of its digital asset trading service in July without complying with the rules, conditions and methods of trading.
Before the cancellation of the deal was announced on Aug 25, news emerged about an indefinite postponement of the deal in July, which was announced amid the due diligence process. That marked another blow to Bitkub, as local firm Proen Corporation had also announced that it would be pulling out of its planned investment in the crypto exchange.
And shortly after the cancellation of the deal was announced, the price of KUB coin dipped by 22% from $75 to $43 each. In contrast, SCB's share price rose 5.74% or by 6 baht from a day earlier to 110.50 baht apiece as investors' concerns eased over the bank's investment in a risky asset. Trading in SCB shares reached 6.5 billion baht, the largest volume traded on the Stock Exchange of Thailand on that day.
Investors earlier expressed their concern that SCB's profit would have to be spared in light of potential losses made by Bitkub, which has been plagued by the digital asset industry's downtrend this year. This trend would likely continue through 2023.
Mr Jirayut, Bitkub Group's chief executive, is still hoping to list the company on a stock exchange, with Hong Kong mentioned as the most likely destination.
The crypto exchange is also in talks with potential local partners to expand to other Southeast Asian markets.
