CP to file Tesco deal with trade panel

CP to file Tesco deal with trade panel

Consumers browse goods at a Tesco Lotus hypermarket. Varuth Hirunyatheb
Consumers browse goods at a Tesco Lotus hypermarket. Varuth Hirunyatheb

Charoen Pokphand Group (CP), the country's biggest agribusiness conglomerate, is scheduled to file documentation for the group's deal to acquire 86.9% of the Thai business of Tesco and 100% of the UK retailer's Malaysian business in a deal valued at US$10.6 billion with the Office of Trade Competition Commission (OTCC) for consideration this week or next.

Sakon Varunyuwatana, chairman of the OTCC, said the filing covers information about the group's combined market share, sales, capital, number of shares and assets, business structure and the impact on overall consumers.

After receiving documentation, the commissioners will rule on whether the acquisition could lead to a monopoly or undue market dominance against the consumer interest and welfare under the 2017 Trade Competition Act. They should take about 90 days for consideration, Mr Sakon said. An extension is possible for up to 15 days.

Mr Sakon said the consideration of market dominance in the retail market involves the fact that CP already owns 7-Eleven convenience stores and the Makro cash-and-carry business.

It will also be based on business necessity and benefits to business promotion, with no serious damage caused to overall business or consumers, he said.

"There are three outcomes: disapprove, approve with conditions and totally approve," Mr Sakon said. "CP already owns a large modern trade outlet with nationwide coverage and controls more than 1 billion baht in market share. If the deal is found to lead to market dominance, we must consider whether to allow the acquisition."

The Trade Competition Act outlines a general framework for merger requirements, whereby prior approval from the OTCC is required if a merger transaction could result in a market monopoly or create market dominance (with a market share in the previous year of over 50% and at least 1 billion baht in turnover; or the top three business operators, in any goods or services, with a combined market share in the previous year of over 75% and at least 1 billion baht in turnover).

Any merger that causes a significant reduction in market competition must be reported to the OTCC within seven days of the date of the merger.

In early March, CP Group beat out beer tycoon Charoen Sirivadhanabhakdi's TCC Group Co and the Chirathivat family's Central Group, Thailand's biggest retailer by market cap, in a battle for UK-based Tesco's Asia business.

The purchase would be done through CP Retail Development Co, a private limited company incorporated under Thai law. The acquiring entity is 100% held by CP Retail Holding Co, in which CP Merchandising Co Ltd (CPM), a wholly owned subsidiary of SET-listed Charoen Pokphand Foods (CPF), directly holds 20%; Charoen Pokphand Holdings Co directly holds 40%; and SET-listed CP All Plc directly holds 40%.

After completion of the Tesco Asia Group investment transaction, CP Retail Development Co will own 86.9% in Tesco Stores Thailand and 100% in Tesco Stores Malaysia Sdn Bhd.


Do you like the content of this article?
COMMENT

Drunk people can't socially distance, UK police conclude

LONDON: Britain's police said Sunday that revellers who packed London's Soho district the night pubs finally reopened made it "crystal clear" that drunk people cannot socially distance.

19:45

Dozens dead, missing in Japan as heavy rain causes floods, mudslides

TOKYO: About 34 people are either confirmed or feared dead -- including 14 at a nursing home -- after torrential rain in Japan triggered massive floods and mudslides, authorities said Sunday.

18:45

Philippines, Indonesia set grim Covid-19 records

Two of Thailand's regional neighbours set unwanted records in their Covid-19 tallies on Sunday.

18:20