Krung Thai Bank (KTB) flatly turned down a renewed offer by Thai Airways International to acquire its stake in the budget airline Nok Air as the new price is still considerably below what the bank expected.
Following the latest round of negotiations on Jan 19, the state-controlled bank held its ground that 44 baht represented a reasonable value for Nok shares, while THAI proposed 30 baht each.
The flag carrier's board on Jan 14 authorised its management to sweeten its offer to buy the 5 million shares held by KTB for 150 million baht, or 30 baht a share, up from the 13 baht THAI originally proposed.
THAI, already the largest shareholder with 39% of Nok Air, wants to buy the bank's holding to gain greater control of the no-frills carrier.
"There is no sign yet the gap between valuations will be bridged," an insider said.
While negotiations are deadlocked for the time being, the source said both parties want to keep the door open for possible talks, though nothing has been scheduled.
Nok Air has been largely independent from THAI.
THAI's new offer was a reversal of management's previous stance that it would not pursue a purchase above 13 baht a share.
It improved its offer in the face of lingering difficulties, largely opposition from the Transport Ministry to its proposed launch of a new low-cost carrier in partnership with Singapore's Tiger Airways.
Industry observers say the chance of Thai Tiger Airways, 51% owned by THAI and other Thai entities and 49% by Tiger, getting off the ground is very slim as THAI has been unable to meet the growing list of conditions demanded by the ministry.
KTB continues to see 44 baht per share as an accurate reflection of the budget airline's book value and growth potential.
The other Nok shareholders are Dhipaya Insurance Plc (10%), the Government Pension Fund (10%), CPB Equity Co (6%), Siam Commercial Bank (5%), the Thailand Prosperity Fund by ING Funds (Thailand) Co (5%), King Power International Co (5%) and individual investors (10%).