CP All (CPALL) is likely to post a marginal foreign exchange loss from its acquisition of Siam Makro (MAKRO) following the baht's retreat, as most of the US-dollar-denominated loans secured to fund the deal have been hedged against foreign exchange risks.
An unnamed source at one of the syndicated loan lenders said CP All's foreign exchange loss from the acquisition is insignificant, as most loans have been hedged at several foreign exchange rates.
On average, the hedging rate is in the range of 29-30 baht to the dollar, the source said.
Shares of CPALL closed unchanged yesterday on the SET at 36.25 baht in trade worth 1.58 billion.
However, the stock was still down for the week from the close of 40.25 baht on May 14.
Investors worry that the baht's rapid pullback against the greenback may hurt CP All, as most of the funds for Makro's takeover have been paid in dollars, while the stock market's sharp fall has also been another blow.
The baht has weakened beyond 31 to the dollar from the year's strongest level of 28.55 in mid-April.
CP All, the local operator of 7-Eleven convenience stores, in late April marked a milestone in the Thai stock market by announcing its Makro takeover in a deal worth 188.88 billion baht, the country's largest-ever acquisition deal.
CP All borrowed 90% to fund the deal, mostly in dollars, while the remaining 10% was financed by the company's cash flows.
Of the 188.88 billion baht, 122 billion has been paid to the Netherlands' SHV Holdings NV for a 64.35% stake in Makro and the rest used to buy shares held by other shareholders.
The first batch of loans worth 65% of the 122-billion-baht have already drawn down for share payment after CP All's shareholder meeting on June 12 approved the deal, said Kittiphun Anutarasoti, a first executive vice-president of Siam Commercial Bank (SCB).
Thailand's third-largest lender is the financial adviser for the acquisition deal and one of the syndicated loan providers.
The acquisition is expected to be completed by August, Mr Kittiphun said.
Besides SCB, the other six lenders are HSBC, Standard Chartered Bank, UBS AG , Sumitomo Mitsui Banking Corporation, Bangkok Bank and Krungthai Bank.
Asia Plus Securities said any baht impact will be limited as CP All hedged most of its dollar-denominated loans.
The research house estimates 36.3% of the deal or US$2.4 billion baht has been paid in that currency, based on the fact that the Dutch company directly owns a 36.3% stake in Makro.
CP All has agreed to pay $27.50 per Makro share, based on a foreign exchange rate of 28.6181 to the dollar.