Why might the P/E multiple of a Thai company increase after acquiring a U.S. firm?

The increase in the price-to-earnings (P/E) multiple of a Thai company after acquiring a U.S. firm can be attributed to reduced political and currency risk associated with U.S. operations. U.S. firms, especially those that are stable and well-established, often provide a lower-risk profile compared to companies in emerging markets. This stability can attract investors, as they typically prefer to invest in businesses with more predictable returns, which positively influences the company’s valuation metrics, including the P/E multiple.

Furthermore, when a Thai company acquires a U.S. firm, it may benefit from the perception of increased reliability and stability in its earnings. The lower risk associated with U.S. operations can lead to greater confidence among investors, which could result in a higher valuation for the acquiring company. This higher valuation is often reflected in an increased P/E multiple post-acquisition.

In this context, other options may not directly contribute to the increase in P/E multiples. For instance, while innovation and competition can impact a company's performance, these factors are less likely to provide the immediate financial stability reflected in a P/E increase upon acquisition. Similarly, while operational costs are relevant to profitability, higher operational costs associated with U.S. firms could actually dampen