Thai Tycoon In $6.6 Bn Bid For Discount Retailer Siam Makro

[webfact]

Thai tycoon in $6.6 bn bid for discount retailer

BANGKOK, April 23, 2013 (AFP) - Thailand's richest tycoon on Tuesday launched a $6.6 billion takeover bid for Thai discount retailer Siam Makro as rapid economic growth drives a boom in the kingdom's retail sector.

The agreed bid is the latest mega-deal involving billionaire Dhanin Chearavanont, whose sprawling empire includes a string of convenience stores operated under the 7-Eleven brand.

Dhanin's CP All said in a statement that it had agreed to buy a 64.35 percent stake in Siam Makro from SHV of the Netherlands for 787.00 baht ($27.3) per share, and would launch a tender offer for the remainder.

It comes months after Dhanin's umbrella group Charoen Pokphand -- which began as an agribusiness conglomerate -- sealed a deal to buy a $9.4 billion stake in Chinese insurance giant Ping An from HSBC.

In March, Forbes estimated that Dhanin and his family were worth $14.3 billion, making him the richest person in Thailand.

Founded in 1988, Siam Makro operates dozens of cash and carry stores across Thailand selling food and consumer products to wholesalers, retailers and other customers.

Dhanin's group was once its top shareholder but sold out after the financial crisis that rocked Asia in 1997.

Thai firms are on an acquisition drive, with another billionaire, Charoen Sirivadhanabhakdi, acquiring Singapore conglomerate Fraser & Neave earlier this year.

Thailand's economy is enjoying rapid economic growth, which hit a record high of 18.9 percent in the fourth quarter of 2012, recovering from the impact of the kingdom's worst floods in decades.


-- (c) Copyright AFP 2013-04-23

[BrianCR]

I remember when Makro first opened over here, to become a customer you had to prove that you had a business (as they considered themselves 100% wholesale) no proof of business, they wouldn't sell to you! Now-a-days, even the local Soi Dogs shop there and for some items even "Big C" is cheaper

[JetsetBkk]

I remember when Makro first opened over here, to become a customer you had to prove that you had a business (as they considered themselves 100% wholesale) no proof of business, they wouldn't sell to you! Now-a-days, even the local Soi Dogs shop there and for some items even "Big C" is cheaper

Big C is more expensive for Meiji milk, "French" bread, boxes of red wine, kitchen paper, kitchen cleaner. I can't think of anything that is cheaper at Big C.

I don't have any shares in Makro.

[JulesMad]

I think Dutch people should get an extra discount at Makro, as it is a Dutch company

[Bluespunk]

I think Dutch people should get an extra discount at Makro, as it is a Dutch company

Not for much longer in LOS.

[maidu]

The Makro near me always asks for a card, and I never have one, but they let me check out anyway. I asked whether a card entitled me to any discount, and they said 'no' so I didn't bother with getting or keeping one. I see non-stop late-model p.u. trucks pulling out of there - fully laden with MSG snacks and soda pop. They must mostly be from restaurants or mom & pop shops. The mark-up to retail for the little guys must be v. small, so they have to sell quantity to make a few baht. They drive lot nicer vehicles and have lot spiffier phones than I have, so they must be doing something right. Either that, or I'm just kee neeo (cheapskape). I think it's the latter. Plus, their vehicles are being paid on time with %. Mine are junkers, but they're paid for up-front.

[Sydebolle]

Well, if you go to the store in Pattaya then you will see that the concept got slightly derailed. Apart from having every Tom, Dick and Harry in the store ripping open wholesale packaged units you find Baht-busses bringing Russian tourists there.
No membership card (for which we had to bring company registration papers, affidavits etc. etc. etc.) is needed as those customers are all booked onto code 9999.
But then again, this is Thailand and its their country. The Big Cs, Tesco Lotus', Villas and the Foodlands wont like it as they are at the shorter end of the stick!
And yes, I've seen the first Russian sign inside Makro Pattaya written by a tourist and had it translated which read "free coffee" - opposite the bakery shelves.

[kiniyow]

You must admit many items are Cheaper in Tesco or Big C...At Least they could offer there customers plastic Bags to carry there purchases...

[Peterphuket]

I remember when Makro first opened over here, to become a customer you had to prove that you had a business (as they considered themselves 100% wholesale) no proof of business, they wouldn't sell to you! Now-a-days, even the local Soi Dogs shop there and for some items even "Big C" is cheaper

That's the problem with the Thai Government, in the Netherlands is it impossible, if you do't have a proof of bussiness or wholesaler it's not possible to buy at the Makro, the Dutch government is very strickt about that kind, and many other rules.

[Locationthailand]

Makro does not have a wide enough range but fresh produce is always quite competitive as is bulk booze. Yes I also had to have a card and that means unfair trade if the whole biz now allows anyone come in but it is their choice after all.

[Peterphuket]

I remember when Makro first opened over here, to become a customer you had to prove that you had a business (as they considered themselves 100% wholesale) no proof of business, they wouldn't sell to you! Now-a-days, even the local Soi Dogs shop there and for some items even "Big C" is cheaper

Big C is more expensive for Meiji milk, "French" bread, boxes of red wine, kitchen paper, kitchen cleaner. I can't think of anything that is cheaper at Big C.

I don't have any shares in Makro.

But they are very tricky so too, when they open a new store in Hua-hin, a box of wine of 5 ltr was 890 bath, now after 2 years the price is the same as at Lotus, they are not cheaper on a average base.

[ripstanley]

I have bought at Makro Chiang Rai. No card required. The beer price is the same as Tessco. I do like their wholemeal bread baked on site.

[TallGuyJohninBKK]

Just what the Thai retailing market needs... more consolidation of retailing into fewer and fewer hands.

It's not like CP with 7/11 and its other retailing isn't big enough already. But now they're taking over another major player in Thai market retailing.

I'll feel so much better when shopping knowing that I'm giving more of my money to Thailand's richest (non royalty) man.

[Gulfsailor]

I remember when Makro first opened over here, to become a customer you had to prove that you had a business (as they considered themselves 100% wholesale) no proof of business, they wouldn't sell to you! Now-a-days, even the local Soi Dogs shop there and for some items even "Big C" is cheaper

That's the problem with the Thai Government, in the Netherlands is it impossible, if you do't have a proof of bussiness or wholesaler it's not possible to buy at the Makro, the Dutch government is very strickt about that kind, and many other rules.

That is because of Makro store locations in The Netherlands. They operate from industrial parks which are far cheaper per m2 than retailspace downtown. Downside to operating a business on industrial park is that you cannot do retail business, as such only B2B selling allowed.

[Thai at Heart]

So how are they going to continue the story that foreign retailers are putting Thais out of business.

Cp now has 7 11 and makro.

[hellodolly]

When I first went in there they said I could have a free card for the day. The next time they gave me a regular membership card at no cost. It is not an issue with me.

I thought they were part of the Cosco chain in North America. The only difference in the two is you could use an American Express card in Cosco and you had to pay a yearly dues.

I did notice that they both haven some products at higher prices than there competitors so you have to keep an eye out for that. Also here at Macro they did check your purchases a little more. don't do enough shopping there to notice if they bring in great products at good prices and then two months later drop them. Common with Cosco.

[Seismic]

getting back on topic.....

I can shop at Makro about 30% cheaper than tesco/cp. yes some items cheaper, but overall check prices like in any other country.

But Makro is just been bought out ??? why??, because it makes money... This guy is not gonna spend 6-7 BILLION baht to buy a company unless it makes a profit.

[SGD]

He isn't the richest man in Thailand by quite a wide margin.

[webfact]

UPDATE
CP All deal raises fear of market dominance
Business Reporters
The Nation


Korsak Chairasmisak, centre, chief executive officer of CP All, smiles as he leads a press conference to announce the Bt189-billion takeover of Siam Makro in Thailand

Makro will be used to offer opportunities to SMEs, farmers, CEO tells press

BANGKOK: -- The Commerce Ministry will closely monitor Makro and 7-Eleven after the announcement of a tie-up, which would create a giant with the largest revenue in the retail sector.

Vatchari Vimooktayon, permanent secretary of the ministry, said the joining up of Siam Makro and CP All - operators of Makro cash-and-carry outlets and 7-Eleven convenience stores - means their combined revenue would be as high as 48.5 per cent of Thailand's trade industry.

"With such a big market share, the ministry will definitely need to closely monitor their practices," she said yesterday. "This is to ensure that consumers and other competitors do not suffer from having to pay more for products due to a few number of players in the retail industry."

The ministry says 7-Eleven is now the biggest retailer in terms of revenue. Last year, its revenue reached Bt159 billion, followed by Tesco Lotus's Bt148 billion, Big C Supercentre's Bt121 billion and Makro's Bt98.62 billion. Of the four, Tesco Lotus is the only retailer that is not listed on the stock exchange.

Under the Bt189-billion deal to take over Siam Makro, CP All will see its annual revenue expand to Bt258 billion.

At a press conference to announce the deal - historic in the local retail industry, Korsak Chairasmisak, chief executive officer of CP All, brushed aside fears of market dominance.

"Makro is a modern cash-and-carry retail format while we operate through a convenience store format," he said with a straight face. "Market dominance should not be implicated in the deal."

Makro would mainly be used as a new distribution channel to export products from small and medium enterprises (SMEs) as well as agricultural goods, such as fresh and frozen produce, to Asean countries, Korsak said. This would offer new opportunities for SME operators and farmers.

Additional benefits of the acquisition would be to strengthen the operation of CP All and its subsidiaries, as well as synergise activities in seeking new products and services catering to customer demand, as well as enhancing efficiency and economy of scale.

CP All is a subsidiary of unlisted Charoen Pokphand Group, which is chaired by Dhanin Chearavanont. Earlier this year, CP Group entered the Chinese insurance market through the US$9.4-billion (Bt270.8-billion) acquisition of a 15-per-cent stake in Ping An Insurance.

CP All's proposed acquisition of Siam Makro worth $6.6 billion is the largest transaction announced globally in the retail sector so far this year and the largest ever in the Asia-Pacific region, according to Thomson Reuters.

The retail sector in Thailand is worth approximately Bt1.4 trillion. Modern trade which cover hypermarkets, supermarkets, convenience stores, department stores, category "killers" and speciality stores generate 40 per cent of that, according to Thai Retailers Association. Modern trade has registered huge growth in the past years amid fierce competition.

Big C rose to the No 3 level through its acquisition of Carrefour in Thailand in 2010, while CP All plans to increase the number of 7-Eleven outlets from nearly 7,000 to 10,000 by 2018.

According to Thomson Reuters, the CP All-Siam Makro deal brings the value of this year's announced retail mergers and acquisitions worldwide to $25.6 billion, up 87 per cent from the same period last year, and the strongest year-to-date level in terms of value since 2007 ($61.2 billion).

Domestic mergers and acquisitions in the Asia-Pacific has reached $73.4 billion so far this year, an 8.8-per-cent increase from the comparative period last year, with the retail sector accounting for 12.5 per cent of target activity, up 490 per cent from 2012 year to date. The value of mergers and acquisitions involving Thai companies amounted to $7.2 billion, a 110-per-cent increase from the same period last year.


-- The Nation 2013-04-24

[Payboy]

$6.6 billion takeover bid for Thai discount retailer Siam Makro

$9.4 billion stake in Chinese insurance giant Ping An from HSBC.

another billionaire, Charoen Sirivadhanabhakdi, acquiring Singapore conglomerate Fraser & Neave earlier this year.

All good reasons to keep the baht strong.

[maidu]

Makro does not have a wide enough range but fresh produce is always quite competitive as is bulk booze. Yes I also had to have a card and that means unfair trade if the whole biz now allows anyone come in but it is their choice after all.

Most of Makro's fresh produce is high priced. And the quality is so-so. Sweet peppers, avocados, to name a couple, are several times the price I can get them at a local market. Bread quality is about C-. They don't have decent quality yogurt, only the sugar-laden stuff which fills 60% of the small container it comes in. I buy about 4 to 5 items there - and that's it - then I go elsewhere for my regular shopping.

[belg]

CPALL, the name says it all, they want it all, your baht ..

so why don't they also buy all the familymarts and 108's ?

so they can truly have a monopoly

next why not buy up tesco's & big c's

than THEY will control the prices they want

[Joe Mamma]

Oh no, there goes Makro's low prices. As the rich get richer who do you think pays??

[lockman]

Meanwhile there is now one here in Mukdahan. Many things I used to buy elsewhere at Makro are now here. All those who complain about prices, should look at the logistics and expense involved in getting many of their products here. And when the flooding was around a few years ago, Tesco was out of most anything, while Makro had most stuff available. Yea that type of canned fish is all gone, but have shelves full of something else.

[BrianCR]

lockman, on 24 Apr 2013 - 14:01, said:

Meanwhile there is now one here in Mukdahan. Many things I used to buy elsewhere at Makro are now here. All those who complain about prices, should look at the logistics and expense involved in getting many of their products here. And when the flooding was around a few years ago, Tesco was out of most anything, while Makro had most stuff available. Yea that type of canned fish is all gone, but have shelves full of something else.

Unlike Tesco, Makro doesn't do it's own logistics and the expense involved in getting many of their products is an expence borne by the supplier, not Makro! Until about 10/12 years ago suppliers had to deliver their products to each Makro branch at the suppliers expense and with profits really cut back to near zero. Suppliers used Makro as a way of getting rid of overstocks and Makro as one of the few companies who bought on a credit basis (all the others used consignment practices) all be it, the length of credit was as long as 3 months but, businesses knew that they would be paid and not have unsold products returned. Makro then came up with another logistics idea and employed a private delivery company who would deliver your products to Makro (for a fee of course) but suppliers weren't allowed to increase their trade price to Makro, reducing supplier profits yet again. Finally Makro introduced a supplier rule that Makro had to sell at least 12 million baht's worth of each product line or they would cease to stock that product. They also have a policy whereas, 99% of products delivered go straight to the shop floor and are not warehoused so, please don't talk about Makro's logistics costs - they don't have any!

[BrianCR]

SGD, on 24 Apr 2013 - 03:53, said:

He isn't the richest man in Thailand by quite a wide margin.

Can you tell us your secret of who is? Don't say Thaksin please, we've heard all that somewhere before

[Payboy]

So, is this gonna be good news for the local mom n'pop stores who buy all their supplies from Makro? Wait, they're all competitors of 7-11, which is run by ......ummmm....CPALL!

[lemoncake]

why are so many of you guys are going all crazy?

how is this any different to any country? there are always rich people who buy out other companies.

whats the difference if big c is cheaper? fine, shop at big c.

i mean really, either some of you are really bored or just do not grasp the concept of business at all.