Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business: sources

[snoop1130]

Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business: sources

By Anshuman Daga

 

FILE PHOTO: FILE PHOTO: A company logo is pictured outside a Tesco supermarket in Altrincham northern England, April 16, 2016. REUTERS/Phil Noble/File Photo

 

SINGAPORE (Reuters) - British retailer Tesco (TSCO.L) has asked bidders to submit binding offers for its Asian business by Friday, in a deal that will see Thai billionaires fight for an asset valued at up to $9 billion, sources with direct knowledge of the matter said.

 

The bidding is shaping up as a battle between Dhanin Chearavanont’s Charoen Pokphand (CP) Group, Central Group, controlled by the Chirathivat family, and beer-and-property magnate Charoen Sirivadhanabhakdi’s TCC Group, they said.

 

Tesco’s Asian operations comprise some 2,000 supermarket outlets and convenience stores in Thailand, where it is one of the biggest retail players, and 74 stores in Malaysia.

 

“This is a very competitive process pursued by serious bidders. Looking at the deal size and financing perspective, most large banks are involved,” said one banking source who did not want be identified as the information is confidential.

 

Antitrust concerns could pose a challenge to some bidders as Thailand’s antitrust office said last month that the deal should not violate anti-monopoly laws.

 

Tesco will review the bids and is set take a decision next month, the sources said.

 

The three Thai groups did not immediately respond to a Reuters query. There was also no response from Tesco, outside office hours.

 

Britain’s biggest retailer said in December it started a review of its Asian operations, made up mainly of the Thai and Malaysian operations, after receiving interest.

 

In the six months to Aug. 24, Tesco’s Thai and Malaysian businesses together generated sales of 2.56 billion pounds ($3.3 billion) and operating profit of 171 million pounds.

 

The sources said that though the tycoons are taking a long-term view of Tesco’s Thai business, their bids are likely to factor in the impact of the coronavirus outbreak, which has curbed near-term growth estimates for the country.

 

Regionally, Thailand is considered one of the most vulnerable economies to the virus outbreak due to its heavy reliance on Chinese tourists and China trade.

 

Still, Tesco’s business offers bidders a chance to scale up their portfolio significantly. “How often do you get these assets in Thailand? And financing is so cheap,” said another source.

 

For Central Group, Tesco’s stores would bulk up its supermarkets and convenience business, while offering CP Group a chance to buy back the supermarket chain it sold to Tesco during the Asian 1997/98 financial crisis.

 

CP owns cash-and-carry Siam Makro (MAKRO.BK), which operates some 130 stores and over 10,000 7-Eleven convenience stores under CP ALL (CPALL.BK).

 

Sirivadhanabhakdi’s TCC Group, through Berli Jucker (BJC.BK), already owns the country’s second-largest hypermarket operator Big C Supercenter.

 

Tesco completed this week its exit from China with the 275 million pound sale of its joint venture stake to state-run partner China Resources Holdings.

 

-- © Copyright Reuters 2020-02-27

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[scorecard]

And I seriously hope that the Thai regulatory authority involved will not allow the sale to any of these bidders so that we don't see a further monopoly scenario.  

[Susco]

5 minutes ago, snoop1130 said:

Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business

 

5 minutes ago, snoop1130 said:

a deal that will see Thai billionaires fight for an asset valued at up to $9 billion

I'm not a native English speaker, but to me both quotes seem to have opposite meanings, where the first to me means starting bids at 9 Billion, and the second maximum value could be 9 Billion.

 

Anyone can explain?

[CGW]

5 minutes ago, Susco said:

Anyone can explain?

I can try!

The "asset" (Tesco) has been valued at 9 billion max, probably by an independent valuer?

The Thai billionaires may offer only 6 billion, then they may eventually negotiate a price that both sides find acceptable, that is my understanding.

[lopburi3]

7 minutes ago, Susco said:

 

I'm not a native English speaker, but to me both quotes seem to have opposite meanings, where the first to me means starting bids at 9 Billion, and the second maximum value could be 9 Billion.

 

Anyone can explain?

Nothing about any minimum bid in my reading - just that firm has estimated value of up to 9 billion.

[Susco]

1 minute ago, CGW said:

I can try!

The "asset" (Tesco) has been valued at 9 billion max, probably by an independent valuer?

The Thai billionaires may offer only 6 billion, then they may eventually negotiate a price that both sides find acceptable, that is my understanding.

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

[Fex Bluse]

Lets see if they ruin it like they do so many other businesses.

[worgeordie]

I am sure CP would like to buy it back,

they must have lost a lot of Face when

they were forced to sell it to Tesco, they

have already acquired Makro which they

also had to sell.

 "Thailand’s antitrust office"  they have one 

regards worgeordie

[CGW]

20 minutes ago, Susco said:

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

Market valuation based on share price - I think? There selling, so that's there asking price?

[jackdd]

38 minutes ago, Susco said:

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

You just read it wrong, this part belongs together: $9 billion Asia business

Instead of: Tesco sets bid deadline for $9 billion Asia business

They could write: Tesco sets bidding deadline for their asian business operations valued at $9 billion.

 

 

[4evermaat]

5 hours ago, worgeordie said:

have already acquired Makro which they

also had to sell.

when did they sell their Makro stake?

[Kinnock]

5 hours ago, worgeordie said:

I am sure CP would like to buy it back,

they must have lost a lot of Face when

they were forced to sell it to Tesco, they

have already acquired Makro which they

also had to sell.

 "Thailand’s antitrust office"  they have one 

regards worgeordie

When Tesco bought Lotus from CP it was hardly a 'chain'.  They only had 2 stores at that time.

 

And Tesco did not buy 100% of Lotus - CP retained about 10%, and Tesco then bought more of the business to take that 10% down to almost 0.  But CP still supported Tesco with land deals and sourcing.  

 

For customers I think Central would be best.  For reducing competition in the retail sector, TCC would be the worst, for allowing a business to own most of the supply chain end to end, then CP would be a problem.

 

But my money is on CP to win.

 

Bit it's a shame (and interesting) that there's no external bidder.

[timendres]

6 hours ago, Susco said:

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

"Bid deadline" is referring to time allowed for bidding to continue, nothing to do with the price, which just happens to be mentioned in the same sentence.

[scorecard]

13 hours ago, worgeordie said:

I am sure CP would like to buy it back,

they must have lost a lot of Face when

they were forced to sell it to Tesco, they

have already acquired Makro which they

also had to sell.

 "Thailand’s antitrust office"  they have one 

regards worgeordie

Ohh, I didn't know CP sold Makro, can you please share a little more detail, thanks.

[mickey rat]

14 hours ago, scorecard said:

And I seriously hope that the Thai regulatory authority involved will not allow the sale to any of these bidders so that we don't see a further monopoly scenario.  

And I seriously hope the tooth fairy is real. 

[topt]

50 minutes ago, scorecard said:

Ohh, I didn't know CP sold Makro, can you please share a little more detail, thanks.

I think he meant they started it and then had to sell it like Lotus but that is not what Wiki seems to be saying -

Quote

Thailand[edit]

Siam Makro Public Company Limited was established in 1988. At the end of 2014 there were 77 Makro stores and five Siam Frozen Food stores in operation, serving a registered customer base of 2.6 million.^[7] Revenues for 2015 were 156 billion baht with a net profit of 5.4 billion baht.^[8] Siam Makro shares are traded on the Stock Exchange of Thailand (SET).^[9]

In 2013, Siam Makro was purchased by Charoen Pokphand Group for US$6.6 billion.^[10]

https://en.wikipedia.org/wiki/Makro

 

They (CP) still own it.

[hotchilli]

14 hours ago, snoop1130 said:

Antitrust concerns could pose a challenge to some bidders as Thailand’s antitrust office said last month that the deal should not violate anti-monopoly laws.

Not violate monopoly law when only the 3 biggest families are bidding!

[scorecard]

10 hours ago, Kinnock said:

When Tesco bought Lotus from CP it was hardly a 'chain'.  They only had 2 stores at that time.

 

And Tesco did not buy 100% of Lotus - CP retained about 10%, and Tesco then bought more of the business to take that 10% down to almost 0.  But CP still supported Tesco with land deals and sourcing.  

 

For customers I think Central would be best.  For reducing competition in the retail sector, TCC would be the worst, for allowing a business to own most of the supply chain end to end, then CP would be a problem.

 

But my money is on CP to win.

 

Bit it's a shame (and interesting) that there's no external bidder.

I wonder why that is, perhaps other potential bidders have concerns that collusion would get in the way of having a good incoming supply chain? 

[christophe75]

To complete such a large transaction, at the onset of a pandemic... would be plain insanity.

 

Furthermore, we are talking here about... distribution business... linked to consumption.

 

The one sector that is about to... vanish.

 

"And it's goooooooone".

 

I mean... from an economic point of view, the Wuwuflu virus is a Black Swan.

 

Nothing less, nothing more. Impossible to make any forecast because there is not any model (the Spanish Flu 1918/1919 is too old).

 

So common sense should command to... wait. Wait and see.

 

But cognitive bias are powerful.. They probably worked on this deal for months... big intellectual, emotional investment....

 

So the bias to "close" the deal must be very powerful...

 

Will intellect overcome emotion ?

[graemeaylward]

So this is the end of Tesco branded goods being imported from UK! Like Tesco Red Onion Chutney, or Tesco Sage and Onion Stuffing, or Tesco Piccalilli. Ah well guess I will just have to make my own ????

 

[khunken]

1 hour ago, graemeaylward said:

So this is the end of Tesco branded goods being imported from UK! Like Tesco Red Onion Chutney, or Tesco Sage and Onion Stuffing, or Tesco Piccalilli. Ah well guess I will just have to make my own ????

 

Not necessarily. TCC, the majority owner of Big C (Central is a minority owner) still sells Casino own brands, some of which I buy regularly.

It would make sense for the new owners of Tesco to continue selling any Tesco own-brand that has customer demand.

[welovesundaysatspace]

 

10 minutes ago, khunken said:

It would make sense for the new owners of Tesco to continue selling any Tesco own-brand that has customer demand.

Either this or they just continue the same product under their own brand if there’s demand. That’s how private label works — someone produces it and you put your label on it, and quite often the exactly same product can be found under different labels (and at  completely different price points) in the same shelf. 

[welovesundaysatspace]

22 hours ago, scorecard said:

And I seriously hope that the Thai regulatory authority involved will not allow the sale to any of these bidders so that we don't see a further monopoly scenario.  

Central doesn’t have much footprint in convenience stores and supermarkets. And their Tops and gourmet markets are a different segment. Don’t see much antitrust issues there. 
 

For CP and BJC, the regulator might demand splitting up the business. I.e. keep the bits that don’t cause antitrust issues and sell the rest. So we might even see Tesco’s operations being split up among different buyers, like CP taking the hypermarket stores where it doesn’t have a footprint and giving BJC the convenience stores and supermarkets where BJC is small. 
 

And, of course, the new antitrust laws only exist for a year or so, and no one knows yet how strictly the regulator will enforce them. Afair there wasn’t a big deal like this yet since the new laws came into effect. 

[welovesundaysatspace]

22 hours ago, Susco said:

 

I'm not a native English speaker, but to me both quotes seem to have opposite meanings, where the first to me means starting bids at 9 Billion, and the second maximum value could be 9 Billion.

 

Anyone can explain?

Tesco (or someone else) apparently (according to this article) says the value of their business here is 9 billion. That doesn’t mean you have to buy it for that price. It’s a bidding process and Tesco asks the three bidders to make a bid until a certain deadline. It’s up to the bidders what they wanna bid; it can be more or less than the 9 billion that Tesco (or whoever) said the business is worth.

 

 

 

[lopburi3]

21 minutes ago, welovesundaysatspace said:

And their Tops and gourmet markets are a different segment.

Actually Tops is a direct competitor (and the only viable option) to Tesco Delivery Service (which is likely the future).  Yes Tops is more of a mall supermarket than stand alone but if both are same owner there will not be any competition.  Big C is not a viable option for daily shopping in my opinion.

[khunken]

17 minutes ago, welovesundaysatspace said:

Central doesn’t have much footprint in convenience stores and supermarkets. And their Tops and gourmet markets are a different segment. Don’t see much antitrust issues there. 
 

For CP and BJC, the regulator might demand splitting up the business. I.e. keep the bits that don’t cause antitrust issues and sell the rest. So we might even see Tesco’s operations being split up among different buyers, like CP taking the hypermarket stores where it doesn’t have a footprint and giving BJC the convenience stores and supermarkets where BJC is small. 
 

And, of course, the new antitrust laws only exist for a year or so, and no one knows yet how strictly the regulator will enforce them. Afair there wasn’t a big deal like this yet since the new laws came into effect. 

It's even more complicated than that.

Central was the founder of Big C, with Carrefour & then Casino purchasing majority shares & operating it before Casino sold it's share to TCC. But Central still has a sizeable stake (c40%) in Big C so if Central wins the Tesco bid it should be forced to divest it's stake in Big C.

What the country really needs is a new operator to break the current triopoly in the large & small supermarket sector. Unfortunately it won't happen currently & no matter which one wins the bid, it will have a conflict of interest.

[Susco]

58 minutes ago, khunken said:

Central was the founder of Big C, with Carrefour & then Casino purchasing majority shares & operating it before Casino sold it's share to TCC. But Central still has a sizeable stake (c40%) in Big C

It seems that Central sold it's stake in Big C Thailand to TCC

 

https://www.reuters.com/article/us-thailand-big-c-supercenter-m-a/thailands-central-sells-stake-in-big-c-to-finance-vietnam-deal-sources-idUSKCN0Y10GP

 

Central, Thailand’s biggest retailer led by tycoon Tos Chirathivat, is expected to gain at least 50 billion baht ($1.4 billion) from the sale of its 25 percent holding, said one person close to the sale process.

The deal will allow TCC to cement its control of Big C Supercenter without worrying about interference from Central which founded the Thai retail firm in 1993 before selling a majority stake to France’s Casino (CASP.PA) six years later.

[welovesundaysatspace]

54 minutes ago, lopburi3 said:

Actually Tops is a direct competitor (and the only viable option) to Tesco Delivery Service (which is likely the future).  Yes Tops is more of a mall supermarket than stand alone but if both are same owner there will not be any competition.  Big C is not a viable option for daily shopping in my opinion.

Same ownership in itself doesn’t cause antitrust issues or reduces competition, the question is whether or to what extent someone dominates a specific market. Of course, it would be up to the regulator to define what markets the players play in, and it’s not necessarily straightforward to define a market. If you define the market as buying groceries and fresh food, then they are all direct competitors in the same market. If you consider customer segment and formats then it’s a different picture. 
 

I don’t see Tops and Tesco playing in the same market; I see Tops as more upscale than Tesco. Do you see your typical Tesco customer buying groceries in a Tops market? 

[Sonhia]

Confidence is lacking more and more in the land of ????

 

The Thai minister of health did tell WESTERNERS, also known as FARANG, a very racist term in my opinion,  to Fxxk Off..

 

[CGW]

1 minute ago, welovesundaysatspace said:

Do you see your typical Tesco customer buying groceries in a Tops market? 

Actually yes, outside the bigger cities there is little difference between the two.