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Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business: sources

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Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business: sources

By Anshuman Daga

 

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FILE PHOTO: FILE PHOTO: A company logo is pictured outside a Tesco supermarket in Altrincham northern England, April 16, 2016. REUTERS/Phil Noble/File Photo

 

SINGAPORE (Reuters) - British retailer Tesco (TSCO.L) has asked bidders to submit binding offers for its Asian business by Friday, in a deal that will see Thai billionaires fight for an asset valued at up to $9 billion, sources with direct knowledge of the matter said.

 

The bidding is shaping up as a battle between Dhanin Chearavanont’s Charoen Pokphand (CP) Group, Central Group, controlled by the Chirathivat family, and beer-and-property magnate Charoen Sirivadhanabhakdi’s TCC Group, they said.

 

Tesco’s Asian operations comprise some 2,000 supermarket outlets and convenience stores in Thailand, where it is one of the biggest retail players, and 74 stores in Malaysia.

 

“This is a very competitive process pursued by serious bidders. Looking at the deal size and financing perspective, most large banks are involved,” said one banking source who did not want be identified as the information is confidential.

 

Antitrust concerns could pose a challenge to some bidders as Thailand’s antitrust office said last month that the deal should not violate anti-monopoly laws.

 

Tesco will review the bids and is set take a decision next month, the sources said.

 

The three Thai groups did not immediately respond to a Reuters query. There was also no response from Tesco, outside office hours.

 

Britain’s biggest retailer said in December it started a review of its Asian operations, made up mainly of the Thai and Malaysian operations, after receiving interest.

 

In the six months to Aug. 24, Tesco’s Thai and Malaysian businesses together generated sales of 2.56 billion pounds ($3.3 billion) and operating profit of 171 million pounds.

 

The sources said that though the tycoons are taking a long-term view of Tesco’s Thai business, their bids are likely to factor in the impact of the coronavirus outbreak, which has curbed near-term growth estimates for the country.

 

Regionally, Thailand is considered one of the most vulnerable economies to the virus outbreak due to its heavy reliance on Chinese tourists and China trade.

 

Still, Tesco’s business offers bidders a chance to scale up their portfolio significantly. “How often do you get these assets in Thailand? And financing is so cheap,” said another source.

 

For Central Group, Tesco’s stores would bulk up its supermarkets and convenience business, while offering CP Group a chance to buy back the supermarket chain it sold to Tesco during the Asian 1997/98 financial crisis.

 

CP owns cash-and-carry Siam Makro (MAKRO.BK), which operates some 130 stores and over 10,000 7-Eleven convenience stores under CP ALL (CPALL.BK).

 

Sirivadhanabhakdi’s TCC Group, through Berli Jucker (BJC.BK), already owns the country’s second-largest hypermarket operator Big C Supercenter.

 

Tesco completed this week its exit from China with the 275 million pound sale of its joint venture stake to state-run partner China Resources Holdings.

 

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-- © Copyright Reuters 2020-02-27

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5 minutes ago, snoop1130 said:

Thai tycoons in fray as Tesco sets bid deadline for $9 billion Asia business

 

5 minutes ago, snoop1130 said:

a deal that will see Thai billionaires fight for an asset valued at up to $9 billion

I'm not a native English speaker, but to me both quotes seem to have opposite meanings, where the first to me means starting bids at 9 Billion, and the second maximum value could be 9 Billion.

 

Anyone can explain?

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5 minutes ago, Susco said:

Anyone can explain?

I can try!

The "asset" (Tesco) has been valued at 9 billion max, probably by an independent valuer?

The Thai billionaires may offer only 6 billion, then they may eventually negotiate a price that both sides find acceptable, that is my understanding.

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7 minutes ago, Susco said:

 

I'm not a native English speaker, but to me both quotes seem to have opposite meanings, where the first to me means starting bids at 9 Billion, and the second maximum value could be 9 Billion.

 

Anyone can explain?

Nothing about any minimum bid in my reading - just that firm has estimated value of up to 9 billion.

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1 minute ago, CGW said:

I can try!

The "asset" (Tesco) has been valued at 9 billion max, probably by an independent valuer?

The Thai billionaires may offer only 6 billion, then they may eventually negotiate a price that both sides find acceptable, that is my understanding.

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

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Lets see if they ruin it like they do so many other businesses.

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20 minutes ago, Susco said:

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

Market valuation based on share price - I think? There selling, so that's there asking price?

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38 minutes ago, Susco said:

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

You just read it wrong, this part belongs together: $9 billion Asia business

Instead of: Tesco sets bid deadline for $9 billion Asia business

They could write: Tesco sets bidding deadline for their asian business operations valued at $9 billion.

 

 

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5 hours ago, worgeordie said:

have already acquired Makro which they

also had to sell.

when did they sell their Makro stake?

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5 hours ago, worgeordie said:

I am sure CP would like to buy it back,

they must have lost a lot of Face when

they were forced to sell it to Tesco, they

have already acquired Makro which they

also had to sell.

 "Thailand’s antitrust office"  they have one 

regards worgeordie

When Tesco bought Lotus from CP it was hardly a 'chain'.  They only had 2 stores at that time.

 

And Tesco did not buy 100% of Lotus - CP retained about 10%, and Tesco then bought more of the business to take that 10% down to almost 0.  But CP still supported Tesco with land deals and sourcing.  

 

For customers I think Central would be best.  For reducing competition in the retail sector, TCC would be the worst, for allowing a business to own most of the supply chain end to end, then CP would be a problem.

 

But my money is on CP to win.

 

Bit it's a shame (and interesting) that there's no external bidder.

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6 hours ago, Susco said:

Tesco sets bid deadline for $9 billion

 

This is what I don't understand, why would a business put a upper limit on the bids it want to receive?

"Bid deadline" is referring to time allowed for bidding to continue, nothing to do with the price, which just happens to be mentioned in the same sentence.

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13 hours ago, worgeordie said:

I am sure CP would like to buy it back,

they must have lost a lot of Face when

they were forced to sell it to Tesco, they

have already acquired Makro which they

also had to sell.

 "Thailand’s antitrust office"  they have one 

regards worgeordie

Ohh, I didn't know CP sold Makro, can you please share a little more detail, thanks.

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14 hours ago, scorecard said:

And I seriously hope that the Thai regulatory authority involved will not allow the sale to any of these bidders so that we don't see a further monopoly scenario.  

And I seriously hope the tooth fairy is real. 

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