Big C Wins Bid For Carrefour Business In Thailand

[george]

RETAIL

Big C wins bid for Carrefour business in Thailand

By The Nation

Big C Supercenter Plc expects the combined business with Carrefour to increase financial returns by 1.2 per cent, based on the combined 2010 estimated sales on a run-rate basis.

The synergies are expected to be fully implemented by 2013. The company plans to finance the acquisition with existing cashflow as well as borrowing, the company said in a press statement.

Its shareholders will vote on the deal on January 5 at an extraordinary meeting.

"Big C and Carrefour’s Thai networks present strong geographical complementarities enabling Big C to double its presence in Greater Bangkok. With 103 hypermarkets in total and a combined 2010 estimated turnover of over Bt 100 billion, Big C will significantly expand its market position and will be close to leader on the hypermarket segment," Big C said.

After the transaction, the total number of shopping centers will exceed 100 and 584,000 square metres of gross leasable area. This enlarged portfolio reinforces Big C’s dual retail-property strategy allowing the implementation of value-creating opportunities.

Big C was suspended from share trading today.

Carrefour announces today the signing of an agreement with Big C Supercentre Plc, a subsidiary of Groupe Casino in Thailand, for the divestment of its operations in Thailand for an enterprise value of 868 million euro.

The transaction is expected to close in the first quarter of 2011.

This valuation corresponds to 120 per cent of the net sales of the business that is being sold and a multiple of 13.0 x EBITDA.

In a statement, Carrefour said that the decision to sell its operations in Thailand is part of its strategy to focus its resources on markets where it holds a leadership position and optimize its capital employed. Carrefour's growth prospects in Thailand did not allow the Group to envisage occupying a leading position in this market in the medium- or long-term.

Present in Thailand since 1996, Carrefour operates 42 stores including 34 hypermarkets (7 in full

ownership).

Carrefour is the fifth-biggest player in organized food distribution in Thailand with a market

share of 6 per cent, net sales of 723 million euro and EBITDA of 67 million euro over a twelve-month period to 30 June 2010.

Big C is the second hypermarket operator in Thailand, with a portfolio of 69 hypermarkets and net sales of 1.7 billion euro over a twelve-month period to June 2010.

-- The Nation 2010-12-12

[asiawatcher]

I hope some management consultancy group gets amongst these people and they rebrand the puke green and orange label and use the store layouts of Carrefour to re-lay their own mess. Big C is a disaster as a retail outlet and could improve sales dramatically simply by clean uncluttered layouts. But this is Thailand - watch the decline and maybe Carrefour will buy back in at a market gain. Usual business for those who know. Interesting to watch what happens.

[kuffki]

I am not sure how this is the latest news as there has been a sign in Carrefour for the past 6 weeks saying that Big C has taken over but no changes to the store or policy's

[fred007]

I hope some management consultancy group gets amongst these people and they rebrand the puke green and orange label and use the store layouts of Carrefour to re-lay their own mess. Big C is a disaster as a retail outlet and could improve sales dramatically simply by clean uncluttered layouts. But this is Thailand - watch the decline and maybe Carrefour will buy back in at a market gain. Usual business for those who know. Interesting to watch what happens.

Could not agree more .....And wait and see how Index and SB Furniture handles The New Ikea Store opening next year

They are in for Rude Awakening.....Me Thinks????

[Valentine]

IMO Big C in Phuket is well laid out & much better than the layout at Carrefour in Jungceylon.

[ozsamurai]

Without a generic brand geared toward the foreign market (which is their main bread & butter) they will have all the layout and space they need to put nothing on the shelves.

2 aisles of baby milk products

2 more of instant noodles

1 of only oil

1 of chips

1 more of chocolate

3 paid for by coke

1 paid for by Pepsi

crappy fruit and veg /meat sections, and all other food items crammed into the only remaining aisle. Tesco is no better, in fact worse, at least you could find something to cook in Carrefour as poor as it was.

Oz

[manjara]

I hope some management consultancy group gets amongst these people and they rebrand the puke green and orange label and use the store layouts of Carrefour to re-lay their own mess. Big C is a disaster as a retail outlet and could improve sales dramatically simply by clean uncluttered layouts. But this is Thailand - watch the decline and maybe Carrefour will buy back in at a market gain. Usual business for those who know. Interesting to watch what happens.

Could not agree more .....And wait and see how Index and SB Furniture handles The New Ikea Store opening next year

They are in for Rude Awakening.....Me Thinks????

Too f****** right! I recently went to Ikea (outside Thailand) after having been to Index and SB in Thailand. The difference is incredible. No contest.

[george]

Carrefours Sold;

Buyer Also French Company Partly Owned By Central

Will we still be able to get the same great imported foods?

By Drew Noyes

In the September 1, 2010 issue of the Pattaya Times the lead story was “Carrefour Pattaya to Remain Open for Now” and told of a likely sale of all Carrefour’s Thailand stores, including the very popular Pattaya store on Central Pattaya Road. This was the only news account of a possible sale of Carrefour’s stores in Thailand.

Now the official announcement has been released stating the Pattaya Carrefour is being sold in a major deal to the French Casino Group which includes the purchase of all of Carrefour’s Thai assets. The transaction is expected to be completed the first quarter of next year.

Records show the purchase price agreed to by the French Casino Group was an astounding US $1.2 billion or 36 billion baht. Carrefour is also a French company.

Consumers in Pattaya are most concerned that the great import products available at Carrefour will still be available. Sources tell the Pattaya Times that indeed the wide selection of meats and packaged import foods will still be available under the new brand.

This is because the French Casino Group is partly owned by Thailand’s Big C led by the Chirathivat family who built their fortune on importing quality products from America and Europe.

Big C, also partly owned by unlisted and privately-held Central Group, Thailand's largest retail group, is expected to finance the deal with cash and borrowing from commercial banks.

"If Big C can successfully merge Carrefour's business culture, personnel and assets with its own, it will be able to compete almost on an equal basis with the market leader, Tesco Lotus," said Tul Wongsuphasawat, president of the Marketing Association of Thailand.

After the acquisition, Casino, whose Thai subsidiary is Big C Supercenter Plc, will own 111 hypermarkets against Tesco's 87. However, if other retail outlets like Lotus Express are included, Tesco has 704 stores nationwide. The purchase of Carrefour's local hypermarket operations will break the lengthy market dominance in Thailand by UK retail giant Tesco Group.

French retailer Casino said the 42-store acquisition would help Big C, in which Casino owns a 63 percent stake, become co-market leader in Thailand, with an estimated turnover of about 96 billion baht.

The French retailer decided to sell its assets in Southeast Asia including Thailand to focus on markets in which it leads in India and China.

Carrefour announced the signing of an agreement with Big C for the divestment of its Thai operations. The sale price of 36 billion baht represents 120% of the net sales of the business that is being sold and 13 times the earnings before interest, tax, depreciation and amortization.

The acquisition sent shares in Thailand's Big C Supercenter PCL up as much as 12.8 percent on the SET to an all-time high of 88 baht when trade resumed the day after the announcement amid expectations of higher profit growth next year.

"Despite Big C and Carrefour potentially being cannibalized in terms of the same store locations, this shouldn't have a significant impact," said Asia Plus Securities analyst Natwarin Tripobsakul.

"The purchase would boost Big C's market share to 31.9 percent from 22.2 percent of the total sales of the four biggest retailers in the country," Natwarin said.

However, that share is still behind the market leader, Britain's Tesco Lotus, with 40.4 percent. Casino said the deal would boost Big C's earnings in 2011 and it was expected to realize significant synergies by 2013.

Chadatip Chutrakul, the chief executive of Siam Piwat Co, the operator of Siam Center and Siam Discovery, said the deal reflects Casino's continued confidence in its local investment.

"It helps lift up the image of our country and keeps us attractive to foreigners thinking of expanding their business here," she said, adding that having Big C and Carrefour under the same roof will help balance out the suppliers of the two new camps of Big C and Tesco.

“At the end of the day, customers will benefit from cheaper retail prices,” said a Tops Supermarket executive. Tops is also owned by Central Group.

Tul Wongsuphasawat, president of the Marketing Association of Thailand, said retail competition will heat up after the deal. Big C will benefit in terms of greater store numbers and lower costs.

Vatchari Vimooktayon, director-general of the Internal Trade Department, agreed the Carrefour deal will ignite competition in the 1.4-trillion-baht retail market, notably between the two giant retailers.

However, she insisted the deal will not violate the Trade Competition Act, since the combined market share of Carrefour and Big C Supercenter is less than 50%, the threshold of market dominance.

The Act defines "market dominance" as having a greater than 50% market share in the previous year or being one of the top three producers with a total market share of at least 75% in the previous year and, in either case, having at least one billion baht in turnover. If any enterprise has a more than 75% market share in an industry, it must split off companies to prevent over dominance.

Mrs Vatchari said authorities pledged to keep a close watch on the retail industry since the largest player’s together control 71%, in order to ensure fair competition and curb price collusion.

Source: Pattaya Times

http://pattaya-times.com/a6568-carrefours-sold-buyer-also-french-company-partly-owned-by-central

[gkinbkk]

Maybe I'm not well schooled in Economics but can someone enlighten me how the purchase of Carrefour by a group that already owns Big C and part of Tops, effectively creating a duopoly, will benefit consumers in lower retail prices......?? If they are claiming greater purchasing power then please, they would NEVER pass on those savings to consumers.

[robert00]

I hope some management consultancy group gets amongst these people and they rebrand the puke green and orange label and use the store layouts of Carrefour to re-lay their own mess. Big C is a disaster as a retail outlet and could improve sales dramatically simply by clean uncluttered layouts. But this is Thailand - watch the decline and maybe Carrefour will buy back in at a market gain. Usual business for those who know. Interesting to watch what happens.

Not only the layouts are wrong, but BIG C in Chiang Mai for instance are by far more expensive than Tasco for instance,

I use to shop at BIG C in Korat at that was cheaper than it's competitors.

I think the manager at the BIG C Super Hwy branch in Chiang Mai needs to do some thinking, until than I will not go back and shop there.

[madmitch]

Without a generic brand geared toward the foreign market (which is their main bread & butter) they will have all the layout and space they need to put nothing on the shelves.

2 aisles of baby milk products

2 more of instant noodles

1 of only oil

1 of chips

1 more of chocolate

3 paid for by coke

1 paid for by Pepsi

crappy fruit and veg /meat sections, and all other food items crammed into the only remaining aisle. Tesco is no better, in fact worse, at least you could find something to cook in Carrefour as poor as it was.

Oz

It is not their main bread and butter. Most of the shoppers are Thai and many of their stores are well away from any farang areas.

I sometimes use the Chachoengsao store and there's no call for the imported foods there so they just don't have them.

Carrefour is in Thailand for the Thai market and they add additional stock in Bangkok and the tourist areas. Whether Big C will do the same, we won't know until the rebranding takes place.

[morejunk]

There were three Hypermarket competitors before. Now there will be two. Lotus and Big C don't need to compete, they just need to stay comparable in price. They will both win and the consumer loses.

You got to love the way Lotus raises prices by 15% and then they offer a "big" price reduction of 10%. Now that's great marketing.

[ozsamurai]

Without a generic brand geared toward the foreign market (which is their main bread & butter) they will have all the layout and space they need to put nothing on the shelves.

2 aisles of baby milk products

2 more of instant noodles

1 of only oil

1 of chips

1 more of chocolate

3 paid for by coke

1 paid for by Pepsi

crappy fruit and veg /meat sections, and all other food items crammed into the only remaining aisle. Tesco is no better, in fact worse, at least you could find something to cook in Carrefour as poor as it was.

Oz

It is not their main bread and butter. Most of the shoppers are Thai and many of their stores are well away from any farang areas.

I sometimes use the Chachoengsao store and there's no call for the imported foods there so they just don't have them.

Carrefour is in Thailand for the Thai market and they add additional stock in Bangkok and the tourist areas. Whether Big C will do the same, we won't know until the rebranding takes place.

Big C and Carrefour’s Thai networks present strong geographical complementarities enabling Big C to double its presence in Greater Bangkok.

nuff said? Now go to their website, check out the store locations, demographically they have positioned themselves IN farang rich areas.....

Oz

[elshaheen]

Wow!!! Fasinating. This is really old news to finally hit the newsstands. I mean, everyone knew about this like say a month ago.

[tangerinehouse]

Thats so extremly Bad News for the Consumer.

Even now the Price in the Supermarkets are more high then (for example) in Germany.

Theres no Market anymore the two Giants can raise the Prices wherever they want.

I believe that Thai Politics play an big role in this game as there not much markets in the world who have nearly no competion in this sector.

The bst way is maybe buy the Stock of BIG C so can catch a gain on the Long TErm from the HUGE profits they will make in the future.

[nong38]

Some reporter must woken up and found this gem. But is does amaze me how european groups who are preety good at home come here and suddenly fing they dont have to try very hard and customers still come and life goes on. If they tried a bit harder they might actually make more profit, but then this is not europe this thailand so I am not expecting to be surprised by anything new happening. My latest surprise is seeing these artesan Arsenal English buscuit tins, something the like I have never seen in England, thankfully, they look dreadful and are probably sweetness factor full.

Wanted one good retailer to make a killing.

[random]

tbh I will avoid any supermarket that has 20 checkouts while only 3 or 4 are open while there are queues of 10 or more people at each checkout, while there are plenty of staff milling around pretty much scratching their <deleted>, or talking gibberish into a microphone while they have staff gathered round them. Be it Big C, Tesco or Carrefour.

i did have a meeting with Big C once about putting my product in there, the, guy I met basically ignored me in reception, just turned his back on me when I greeted him and walked away expecting me to follow. I stood and waited for him to come back and said I wondered where he had gone, I guessed he could not have been the person meeting me as there was no greeting or words exchanged. this lack of sense permeates through the stores when you constantly see aisles blocked by stackers, when staff try and push past you rather than realizing you are the customer, when they ignore you when you are waiting for service and all look at each other to see who will go to serve you. that said though i have encountered some very good and helpful staff in Big C but sadly the <deleted> ones let them down.

[newermonkey]

It will be a shame if Big C replaces those unique European deli products with cheap items that sell well to the Thai market.

Its a shame they never properly market the special products they hold, for instance many french products have no translation into English or Thai so the shoppers dont dare buy them not knowing whats inside the packaging. I am sure there are not that many French speaking customers so these products no doubt get thrown away when the sell by date expires.

Would you buy - escargots au fromage ?

Edited December 14, 2010 by newermonkey

[cinbkk]

I am going to miss them big time, nowhere else can you buy good quality imported European products at reasonable supermarket prices...I know the competitors will try to fill the gap but I don't think they'll do it nearly as well as C4 currently offer. Cheese, bread, meats, wine, chocolate...all at very affordable prices. I for one will be stocking up over the next few weeks. very sad loss to the Thai market. Again we will be faced with a lack of choice...can't blame the Thai authorities of course, as we might complain about other near monopolies offering poor service (Truevisions) as this was a decision made in Europe, but it's still a real loss and a diminution in quality of life.

[MaiChai]

I am not sure how this is the latest news as there has been a sign in Carrefour for the past 6 weeks saying that Big C has taken over but no changes to the store or policy's

Agreed. This was posted a couple of weeks back. Guess this is the completion in terms of the stock market?

Personally I think its a great shame. It just means less choice, and Thailand becomes dominated by (bland) Big C and Tesco. Ok there is smaller others like Tops, etc, but ultimatly it means less choice.

I wonder why Carrefour left Thailand. The official reason is that they wanted the money to expand in Indian, however I suspect they don't make much money here. A case of lots of Thais walking around in the aircon not buying much? Certainly you do not see full trollies like you see when folks do their weekly shop in Europe?

[Rinrada]

So now in Chiang Mai we will have 2 Big Cs within fart...err spitting distance of each other ...same layouts,prices and wonderfull choices.... and who suggested that competition is dead

What we REALY need over there is an Aldi and Lidl....

Special offer this week in our local is 400 grams of Emmental for £1-20 (about 60Bt)and 4 pint of milk for a quid....

if only that was Thai prices...

[timekeeper]

in my opinion Big C will decimate Carrefours business in six months