CP All's 188.88-billion-baht takeover of Siam Makro, the biggest merger or acquisition in the global retail sector this year, will be a springboard for the local operator of 7-Eleven stores to enter the cash-and-carry market and expand abroad, say analysts.
As CP All is the only 7-Eleven franchise holder in Thailand, expansion of business abroad is restricted, but the firm can use Makro to expand within the region ahead of the Asean Economic Community in 2016, Parin Kitchatornpitak, a senior vice-president of KTB Securities, said after analysts met CP All executives.
"The Asean market has vast room for growth in the retail business," he said.
CP All yesterday announced it will spend 121.54 billion baht to acquire a 64.35% stake from Netherlands-based SHV Holdings and use an additional 67.34 billion baht to buy the remaining shares from other holders.
Under the plan, 90% of the 188.88-billion-baht deal will be financed by one-year syndicated loans from several institutions including Siam Commercial Bank, with the remaining 10% coming from CP All's cash flow. Makro had 57 stores at the end of last year.
An analyst at Krungsri Securities echoed Mr Parin's view, saying the acquisition will let CP All expand its business into cash-and-carry and gain higher bargaining power.
Also, Makro's focus on food for hotels, restaurants and caterers can be a channel for CP Group to sell its products, said the analyst, who asked not to be named.
CP All asked the SET to suspend trading of its securities yesterday, following Makro's request of a two-day suspension through yesterday.
Before the suspension, CP All's share price was 43.50 baht, while Makro stood at 682 baht.
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Writer: Oranan Paweewun