CP All Plc shareholders approved the retailer's 189 billion baht acquisition of Siam Makro Plc, the country's biggest ever takeover.
A shopper pushes a cart carrying goods at cash and carry store, Makro in Bangkok, on Wednesday. CP All Plc shareholders approves the retailer's 189 billion baht acquisition of Siam Makro Plc. (EPA photo)
About 87% of shareholders who attended a meeting on Tuesday voted for the proposal, more than the 75% required, said Supot Shitgasornpongse, the company's secretary.
CP All, controlled by billionaire Dhanin Chearavanont's Charoen Pokphand (CP) Group, offered 787 baht a share for Siam Makro, the retailer said on April 24.
Mr Dhanin is trying to reassemble his retail empire after earlier selling control of the membership-warehouse chain he founded. He's offering about 53 times Siam Makro's 2012 earnings, more than double the average for 20 retailer takeovers in emerging Asia announced over the last five years, data compiled by Bloomberg show.
"CP All would significantly strengthen its domination in Thailand's commerce industry by expanding into the cash-and- carry business," said Jintana Mekintharanggur, who helps oversee about $200 million as director of equities investment at Manulife Asset Management Co. "Synergies may provide a justification for paying that expensive price," she said.
Mr Dhanin is buying companies at home and abroad, including CP Group's purchase of a stake in China's Ping An Insurance (Group) Co.
The Siam Makro purchase is the largest on record for Thai companies. CP All had cash and cash equivalents of 35 billion baht with no debt as of March 31, according to the company's financial statements.
"In the short term, Siam Makro's earnings contribution wouldn't be sufficient to cover funding costs," Chaiyatorn Sricharoen, an analyst at Bualuang Securities Plc, said in a note on Tuesday. "Still, CP All will gain long-term benefits including added bargaining power with suppliers and pooling purchases of raw materials," he said.
CP All's acquisition of Siam Makro tops the purchase of PTT Aromatics and Refining Plc by PTT Chemical Plc in 2011 to become the largest on record in Thailand, data compiled by Bloomberg show.
Mr Dhanin and SHV founded Siam Makro in 1988, according to the company's website. CP All agreed to buy SHV's 64% stake for 787 baht a share and will make a tender offer to other shareholders at the same price, it said.
Charoen Pokphand was once Siam Makro's largest shareholder with a stake of as much as 47% in 1997, the same year that the devaluation of the baht triggered a financial crisis that pushed many Asian economies into recession.
After the crisis, Mr Dhanin sold stakes in companies including Siam Makro and Lotus Supercentre, which was bought by Tesco. In May 2005, a Charoen Pokphand unit sold 7% of Siam Makro back to the company that controlled the retailer for 60 baht per share.