Tesco agrees sale of businesses in Thailand, Malaysia for $10.6 billion to CP group

[webfact]

Tesco agrees sale of businesses in Thailand, Malaysia for $10.6 billion to CP group

 

FILE PHOTO: A view of the entrance to a Tesco Lotus retail shop in Bangkok, Thailand, January 18, 2020. REUTERS/Chayut Setboonsarng

 

LONDON (Reuters) - Britain's biggest retailer Tesco <TSCO.L> said on Monday it will return $6.6 billion (5 billion pounds) to shareholders after agreeing to sell its businesses in Thailand and Malaysia to Charoen Pokphand Group for an enterprise value of $10.6 billion.

 

The UK supermarket group kicked off a review of its Asian businesses in December after receiving interest in the assets, signalling a further retreat from its once lofty global ambitions.

 

Following completion of the disposal to the Thai group controlled by Dhanin Chearavanont, Tesco intends to return cash to shareholders via a special dividend with an associated share consolidation.

 

Tesco said the deal is conditional on the approval of its shareholders and regulatory approvals in Thailand and Malaysia, which is expected during the second half of 2020.

 

The deal's completion would mean Tesco's only overseas operations, apart from Ireland, would be its central European division, consisting of stores in the Czech Republic, Hungary, Poland and Slovakia.

 

"This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders," said Tesco Chief Executive Dave Lewis.

 

(Reporting by James Davey; editing by Kate Holton)

 

-- © Copyright Reuters 2020-03-09

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[scorecard]

Sell to CP and reduce competition, prices go up, service reduces, customers have no choices. One of the negative aspects of rampant capitalism. 

[Grumpy John]

For the Thai people this is not a good thing.   Makro and Lotus against Big C and Tops is almost an oligopoly...or maybe it is if you dig into it.  My concern is collusion.  And denial of entry for a new player.  I've said before Thailand needs the ALDI chain to "keep the bust-rds honest...now more than ever! 

[monkfish]

Was Tesco Lotus will they now use the Lotus brand name as I believe Lotus is under the CP group?
https://en.wikipedia.org/wiki/Charoen_Pokphand

This could make them more competitive we will see.

[zydeco]

There goes the canned salmon.

[scorecard]

15 minutes ago, monkfish said:

Was Tesco Lotus will they now use the Lotus brand name as I believe Lotus is under the CP group?
https://en.wikipedia.org/wiki/Charoen_Pokphand

This could make them more competitive we will see.

More competitive, how's that?

[NCC1701A]

oh well, this does no bode well. but we will see.

 

funny this could have more of a impact on me that the virus. so far.  

[Stocky]

44 minutes ago, Grumpy John said:

For the Thai people this is not a good thing.   Makro and Lotus against Big C and Tops is almost an oligopoly...or maybe it is if you dig into it.  My concern is collusion.  And denial of entry for a new player.  I've said before Thailand needs the ALDI chain to "keep the bust-rds honest...now more than ever! 

It could have been worse, Big-C was also bidding for Tesco.

[Jonathan Fairfield]

CP Group's $10 billion Tesco deal to test mettle of Thailand's new antitrust watchdog

By Chayut Setboonsarng and Anshuman Daga

 

FILE PHOTO: A Tesco sign outside one of the supermarket group's stores in Altrincham, northern England, April 16, 2016. REUTERS/Phil Noble

 

BANGKOK/SINGAPORE (Reuters) - CP Group's $10 billion deal to buy Tesco PLC's <TSCO.L> 2,000 Thai retail outlets marks the end of a three-way tycoon tussle - and the beginning of the first engagement for Thailand's newly powerful antitrust watchdog.

 

The British grocery chain on Monday chose Dhanin Chearavanont's operator of 12,000 7-Eleven convenience stores over the Chirathivat family's Central Group of Companies Ltd - Thailand's biggest retailer by market capitalisation - and beer magnate Charoen Sirivadhanabhakdi's TCC Group Co Ltd, said people with direct knowledge of the matter.

 

Interest from the tycoons and their overlapping businesses in a deal only flagged in December has already drawn what sources said was the Thai watchdog's first pre-transaction warning about antitrust compliance.

 

The Office of Trade Competition Commission (OTCC) found its voice after becoming independent under new laws in 2017 with a mandate to block transactions that would create monopolies, at a time of increased public scrutiny of tycoons' business empires.

 

The first deal the watchdog has to rule on is the country's second-biggest after Charoen Pokphand Group Co Ltd (CP Group) paid $9.4 billion for a minority stake in Ping An Insurance Group Co of China Ltd <601318.SS> <2318.HK> in 2012, Refinitiv data showed.

 

"The transaction pits one of the most influential family conglomerates against a newly empowered regulator," said Ben Kiatkwankul, partner at consultancy Maverick Consulting Group. "The asset's size and increasing public sentiment versus tycoon dominance in the economy will make the OTCC's task challenging."

 

CP Group runs its 12,000 7-Eleven convenience stores through CP All PCL <CPALL.BK> and about 80 cash-and-carry stores under Siam Makro PCL <MAKRO.BK>.

 

The firm on Monday said, upon antitrust approval, the deal will give it "a complementary retail business ... and enable the company to operate a wider range of outlets."

 

It will gain control of 1,965 stores Tesco operates in Thailand - much of which the British firm bought from CP Group during the 1997-8 Asian financial crisis. Included are 200 Tesco Lotus hypermarkets and 1,600 Tesco Lotus Express convenience stores. It will also buy 74 outlets in Malaysia.

 

OTCC Chairman Sakon Varunyuwatana previously told Reuters the watchdog set up a committee to rule on the deal and which is able to provide a preliminary review of each proposed Tesco bid upon suitor request - though none had been received.

 

"We are ready with a committee and have mapped out several scenarios," Sakon said. "The committee is comprised of economists, academics related to the retail business, competition law experts and our own officers and experts."

 

"We can tap into information across other agencies to support our investigation," he said.

 

Under the 2017 law, proposed mergers that could lead to market dominance or monopoly must be reviewed by the OTCC committee, which approves or rejects the proposal based on business necessity and its impact on consumers and the economy.

 

Dominance is defined as having a market share of over 50%, or 75% when combined with two peers.

"The question is how antitrust is defined," said a banker familiar with the deal. "Will 7-Eleven stores be included to calculate market share?"

 

In 2018, the energy regulator blocked Global Power Synergy PCL's <GPSC.BK> proposed $4 billion merger with Glow Energy PCL over monopoly concerns regarding industrial estates. It finally approved the deal on condition Glow sold a power provider.

 

The likely outcome for the Tesco deal is regulatory approval with broad conditions - and with a very public explanation, said Jirapong Wriwat, Partner at Nishimura & Asahi (Thailand).

 

"The Thai public is not afraid to express strong opinions towards tycoons. These views have been echoed in parliament and could gain momentum in other industries," said Kiatkwankul.

 

"The OTCC's mandate is to protect public interest and market competition and so it will have to set a clear precedence."

 

(Reporting by Chayut Setboonsarng in Bangkok and Anshuman Daga in Singapore; Editing by Jennifer Hughes and Christopher Cushing)

 

-- © Copyright Reuters 2020-03-09

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[monkfish]

9 minutes ago, scorecard said:

More competitive, how's that?

Macro is also under CP group which in my opinion are more competitive than Tesco's especially if they bring some of the products over from Macro.
They're also Chinese so have access to cheaper goods.

[Kinnock]

Couple of errors in the Reuters report:

 

"It will gain control of 1,965 stores Tesco operates in Thailand - much of which the British firm bought from CP Group during the 1997-8 Asian financial crisis"

 

- CP had only 2 Lotus stores when Tesco arrived.

 

"CP has 12,000 7-11 stores".

 

- I think there's more than that down my street 

 

[bkkcanuck8]

They should require Makro Thailand to be divested to a 3rd party (not Big C). 

[Yorkshire Tea]

1 minute ago, bkkcanuck8 said:

They should require Makro Thailand to be divested to a 3rd party (not Big C). 

But, they love monopolies here.  Just looks at the breweries ????

[Chelseafan]

Will it go through? won't it go through? I'll bet my wife that it will....

 

[bangkokfrog]

The new rulers have had enough time to get their assets offshore, so maybe this potential sale is why the baht has been artificially propped up for the last year. Hopefully, when it goes through the baht will fall to a more realistic level. One can always dream! 

[Yadon Toploy]

Can they see the writing on the wall and are they getting out while the going is good?

 

They've had a good run in Thailand. One of very few companies to succeed in what is a very difficult market.

[Chazar]

4 hours ago, Chelseafan said:

Will it go through? won't it go through? I'll bet my wife that it will....

 

ill see  your  wife and  throw  in  the  kids as  well!

[mickey rat]

The Chinese/Thai monopolists are consolidating their strangle hold. Fortunately there should be plenty of high paying 300 baht a day jobs for those mom and pop business owners they run out of business working for CP chicken! I hear KFC is hiring.????

[robblok]

3 hours ago, bangkokfrog said:

The new rulers have had enough time to get their assets offshore, so maybe this potential sale is why the baht has been artificially propped up for the last year. Hopefully, when it goes through the baht will fall to a more realistic level. One can always dream! 

Yes even people with absolutelely no knowledge of how a currency price comes to be can dream. 

 

What proof do you have for your claims.. 

 

Its quite simple if people want your currency so more export and tourism then import it goes up otherwise it goes down. Cant fix the baht or prop it up. But you will always have foreigners believing this.

[justin case]

great, total food control to one big company

 

makro became much less attractive in prices last couple of weeks, increase, increase, increase

 

all your chemical preserved foods now even more pushed in tesco, as if owning all 7/11 was not enough

[BestB]

30 minutes ago, robblok said:

Yes even people with absolutelely no knowledge of how a currency price comes to be can dream. 

 

What proof do you have for your claims.. 

 

Its quite simple if people want your currency so more export and tourism then import it goes up otherwise it goes down. Cant fix the baht or prop it up. But you will always have foreigners believing this.

You are not 100% right. Just the other week baht started to weaken because of the virus , so BOT started to sell gold to help hold baht value . 
 

Made little sense and still makes no sense but this was the press release , baht weakening , BOT selling gold to help 

[robblok]

3 minutes ago, BestB said:

You are not 100% right. Just the other week baht started to weaken because of the virus , so BOT started to sell gold to help hold baht value . 
 

Made little sense and still makes no sense but this was the press release , baht weakening , BOT selling gold to help 

Yes but manipulation like that can be proven and shown and you can play with the interest rate but all of that is in full view not some secret of propping up the baht. 

[BestB]

Just now, robblok said:

Yes but manipulation like that can be proven and shown and you can play with the interest rate but all of that is in full view not some secret of propping up the baht. 

True but it does not stop someone from privately buying up Or selling up gold or currency In billions of dollars . Those creating fake demand or fake investments. Not saying it was done or being done but is a possibility 

[robblok]

38 minutes ago, BestB said:

True but it does not stop someone from privately buying up Or selling up gold or currency In billions of dollars . Those creating fake demand or fake investments. Not saying it was done or being done but is a possibility 

Then you need to have billions of dollars.. i worked at a stock exchange company and all trades are registered and you can see it in volume trading such. I was often behind trading stations so this is not hidden information.

[BestB]

5 minutes ago, robblok said:

Then you need to have billions of dollars.. i worked at a stock exchange company and all trades are registered and you can see it in volume trading such. I was often behind trading stations so this is not hidden information.

You comparing west and Thailand , things are not the same . If someone was to investigate perhaps they would also find it. Again not saying someone was doing it and still is but it is doable and bullions for those who have interest is spare change when they are worth tens of billions ????

[transam]

I knew the writing was on the wall when they stopped selling HP sauce at my branch....????

[SupermarineS6B]

When i first came to Thailand there was only mom and pop shops all over the place, no phones, no deodorant, no ATMs and if you wanted to make an overseas call you went to the post office...... Then them pesky farangs turned up with Carrefour and Tescos, skytrains and undergrounds and all kinds of foreign ideas....... Isn't it strange how the locals dumped most of their home grown stuff and took over western businesses.........  7/11, Tescos......... not exactly mom and pop shops....... and not home grown.....  I also heard that Mr CPs Thai lessons are coming on great.....

Edited March 10, 2020 by SupermarineS6B

[robblok]

14 minutes ago, BestB said:

You comparing west and Thailand , things are not the same . If someone was to investigate perhaps they would also find it. Again not saying someone was doing it and still is but it is doable and bullions for those who have interest is spare change when they are worth tens of billions ????

I think your a bit confused about information available these things would show up even in Thailand. These are international trading standards. Just look at the financial pages of the bankok post. You will see that they talk about trading volumes too. So you denying that this info is available is a bit strange. Do you have actual experience in this field ? I am not saying that they can trace it staight back to who bought it. I am saying you can see from trading volume and so on if manipulation happens. 

[Baerboxer]

3 hours ago, Yadon Toploy said:

Can they see the writing on the wall and are they getting out while the going is good?

 

They've had a good run in Thailand. One of very few companies to succeed in what is a very difficult market.

 

Er no, They're in trouble and retrenching.

[Baerboxer]

1 hour ago, robblok said:

Yes but manipulation like that can be proven and shown and you can play with the interest rate but all of that is in full view not some secret of propping up the baht. 

 

I really don't know where some people get their ideas from about how the international currency markets work. But it seems fashionable to quote the remark "the baht's being propped up" as if they know something. I think most of this is bar talk with people simply repeating it parrot fashion.