Central sells Big C stake
Rival TCC Group headed by liquor billionaire Charoen Sirivadhanabhakdi set to pay B50bn for deal
published : 11 May 2016 at 02:31
updated: 11 May 2016 at 06:16
writer: Pitsinee Jitpleecheep & Reuters
Central Group has accepted a tender offer from arch rival TCC Group for its 25% stake in Big C Supercenter Plc, operator of the hypermarket chain, according to a senior Central executive.
The unexpected move is to help Central raise funds to buy Big C assets in Vietnam, according to other sources.
Thailand's biggest retailer, led by tycoon Tos Chirathivat, is expected to gain at least 50 billion baht from the sale of its 25% holding, said one person close to the sale process.
In March, Mr Tos, Central's chief executive, insisted he had no plan to sell the Big C stake because his group was a co-founder of Big C in Thailand 23 years ago.
- Earlier report: Berli Jucker to run Big C in Thailand
Since 1993, Big C has been successful and grown to be worth 200 billion baht in market capitalisation. Central, which used to be a major shareholder in Big C, sold some stakes in the SET-listed hypermarket chain during the 1997 financial crisis.
TCC's flagship retail unit Berli Jucker Plc now holds a 58.55% stake in Big C.
Central, which had a pre-existing stake in Big C Supercenter, lost out to Berli Jucker in the battle to gain control of the Thai unit. TCC Group, led by billionaire Charoen Sirivadhanabhakdi, won Big C Thailand's assets in a deal worth €3.1 billion (about 120 billion baht).
But Central emerged the winner for the Vietnam unit, called Big C Vietnam, agreeing to pay €920 million. Central has teamed up with Nguyen Kim Group, the biggest operator of appliance stores in Vietnam, on this deal.
The sales of Big C assets in Thailand and Vietnam were made because French retailer Casino Group, the major shareholder, wanted to cut its massive debts. Both businesses encompass hypermarkets, supermarkets and convenience stores.
Berli Jucker informed the Stock Exchange of Thailand (SET) that it will make a tender offer for the remaining 41.45% stake in Big C.
After the acquisition, Big C has plans to open 84 new stores this year, including branches of Big C Market and Mini Big C as well as Pure drugstores.
A retail industry source said Central decided to sell its 25% stake in Big C because it wanted to unlock itself from an agreement with Casino that meant Central could not operate its hypermarket or discount store business on its own in Thailand.
"The Big C share sales will benefit Central Group a lot," the source said. "The first thing is it will get a lot of funds to finance its Big C Vietnam purchase. And another is it will have freedom to engage in the hypermarket business as it wants."
The source predicted that Central would upgrade its Tops SuperKoom supermarkets to become similar to Big C outlets in the near future.
There are 14 Tops SuperKoom stores in Bangkok and 15 in other provinces. They operate under Central Food Retail.
The source said Central had changed its mind on its Big C stake because the retail situation was changing and the group had new motivation after winning Big C Vietnam.
"The area of discount stores is interesting and Central wants to have a presence in this segment for many years. It failed to acquire Carrefour assets a few years and recently lost to TCC to buy Big C Thailand," the source said.
This persuaded Central to explore retail opportunities in Vietnam.
Vietnam's overall retail market is quite big and 90% of the sector remains in traditional retail with only 10% modern trade.
The Vietnamese economy has been growing strongly and its people earn more and want to have an urban lifestyle, so the opportunities for modern trade are huge.
Berli Jucker (BJC) shares closed Tuesday on the SET at 36 baht, up 25 satang, in trade worth 17.7 million baht.