CP offers record takeover deal for Siam Makro
The retail arm of Charoen Pokphand Group, CP All Plc which operates 7-Eleven convenience stores, will put 188.88 billion baht (US$6.6 billion) to buy Makro cash-and-carry stores in Thailand.
- Published: 23/04/2013 at 05:45 PM
- Newspaper section: topstories
According to Thomson Reuters, CP All agreed to acquire a 64.346% interest in Bangkok-based Siam Makro Plc for 787 baht a share ($27.451), or a value of $4.239 billion via tender offer from Netherlands-based SHV Holdings NV. The company also agreed to acquire the remaining 35.654% stake which it does not already own in Siam Makro Plc for US$2.349 billion.
"All in all, the proposed acquisition, with a total value worth $6.6 billion, is the largest announced M&A transaction globally in the retail sector so far this year. It is also the largest M&A transaction involving Asia Pacific to date,'' said Thomson Reuters in its released analysis.
The acquisition will put control of the discount retailer back in the hands of billionaire Dhanin Chearavanont. CP Group was a co-founder of Siam Makro in 1988.
Korsak: Siam Makro will expand into Asean countries and China. (Photo by Pattarapong Chatpattarasill)
Korsak Chairasmisak, chief executive officer of CP All, said that as Thailand is moving towards AEC in the next 20 months, the company sees an opportunity for Thai producers and manufacturers to showcase their products around Asean, which has more than 600 million people.
CP All said in its press statement that Makro will be a new distribution channel to export products from Thai small and medium enterprises (SMEs) and agricultural products, as well as fresh and frozen goods such as meat products.
Mr Korsak said Thai exports have a reputation for high quality, but they still need more effective distribution channels. Thus CP All would bridge this gap by using its own experience and the successful operations of Siam Makro, a leading retailer in markets such as dry groceries, fresh and frozen goods, and other necessities.
Mr Korsak added that Siam Makro will spearhead a CP drive into Asean countries and China. The first country it plans to tap will be Laos or Vietnam.
He expects that the combined sales of those two companies will hit up to 300 billion baht a year.
Referring to the source of funding to this deal, 10% will come from CP All's own cash and the rest distributed roughly equally from five financial institutions. Siam Commercial Bank is sole financial adviser and one of the joint mandated lead arrangers and underwriters, together with Hongkong and Shanghai Banking Corporation (HSBC), Standard Chartered Bank, UBS AG, and Sumitomo Mitsui Banking Corporation (SMBC). Baker & McKenzie is legal adviser for the transaction.
However, the acquisition of shares shall be put to an extraordinary meeting for shareholders for approval on June 12. The actual shares acquisition will be carried out in July and August.
About the author
- Writer: Online Reporters