Friday, September 3, 2010
RETAILERS JUMP FOR CARREFOUR SE ASIA ASSETS
(Reuters) - At least four retailers from Europe and Asia are poised to submit first-round bids for Carrefour SA's roughly $1 billion-worth of Southeast Asian assets on Wednesday, sources said, showing robust demand for the retail operations.
France's Carrefour, Europe's top retailer, is exiting Singapore, Malaysia and Thailand to focus on markets where it has a leading position, sources with knowledge of the matter have previously told Reuters.
The race has drawn in France's Casino Guichard Perrachon SA and Britain's Tesco Plc as well as regional players like Dairy Farm which owns Giant and Cold Storage chains in Southeast Asia, sources said.Japan's No.2 retail group Aeon has also thrown its hat into the ring, sources said on Wednesday, and appointed Nomura to advise it on its bid.
Acquiring Carrefour's 40 stores in Thailand, 19 in Malaysia and two outlets in Singapore would almost triple Aeon's chain in the three countries to 99 stores.
Aeon will make one bid for Carrefour's Malaysian and Singapore stores, and a separate bid for the outlets in Thailand, according to the three sources, who were not authorised to speak on the matter publicly.
Other parties said to be interested in the sale included, Thailand's Berli Jucker Pcl and Thailand's biggest energy company PTT Pcl.
For a graphic on Thai GDP and expected business sentiment, click here r
The appeal of Carrefour's Southeast Asia chains lies in an expected acceleration of consumer spending in the three Southeast Asian markets due to strong economic growth. Several strategic buyers are hoping to consolidate their positions in these countries.
"Any buyer of these assets would have to increase profitability by 3-4 times to achieve a cost of capital return," said London-based RBS analyst Justin Scarborough
He said the $1 billion sale tag "seems rather high" at around one times sales for businesses with relatively low margins.
Thailand, where Tesco is a leading player in the hypermarket or superstore segment and Carrefour is No.4, likely is the most sought-after assets followed by Malaysia, according to a source with direct knowledge of the deal.
The sources did not want to be named because of the sensitivity of the auction process.
Carrefour had split the sale into two, with the Singapore and Malaysia business being offered in one deal and Thailand being sold separately, sources said.
"This is really about Thailand and Malaysia," the source said, adding the Singapore business was small with two stores.
Phillip Securities Thailand has put a sale price of 16 billion to 19 billion baht ($496-590 million) on the Thai operations.
"We were amazed by the number of people at shopping malls even on weekdays, which supports our bullish view on domestic consumption and the Thai economy," said CLSA analyst Pattawan Phanussopakul in a note to clients on Wednesday.
Carrefour and Dairy Farm declined to comment on the sale and the other companies mentioned were not immediately available for comment.
Goldman Sachs Group Inc and UBS AG are advising Carrefour on the deal. Casino is being advised by Deutsche and RBS, while Dairy Farm seeking advice from Rothschild, sources said.
Carrefour has 626 stores in Asia, with more than two-thirds in China alone. Indonesia has 76, Taiwan 65, Malaysia 19, Singapore two and Thailand 40, including 39 hypermarkets.
In recent years, Carrefour has pulled out of Japan and South Korea and the latest exit comes as Carrefour battles sluggish sales in Europe.
In 2009, Asia accounted for 7.9 percent of Carrefour's sales of 85.9 billion euros ($111 billion), while Thailand contributed 9.1 percent of Asian sales, based on the company's latest accounts, giving Thailand sales of about $800 million.
In Thailand, Carrefour has a market share of around 2 percent behind CP All Pcl, Tesco and Big C Supercenter Pcl, part-owned by Casino, the top three retailers there, according to RBS.
(Additional reporting by Vidalon Dominique in PARIS, Saeed Azhar in SINGAPORE; Editing by Valerie Lee)