Big C deal helps fulfil Charoen’s dream


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The acquisition boosted the value of deals in Southeast Asia over the past 12 months to US$50.6 billion (Bt1.78 trillion).

Big C stock closed 9.69 per cent higher at Bt249 in trading yesterday.

Agreeing to pay 3.1 billion euros (Bt123 billion) to France's Casino Group for a 59-per-cent stake and probably Bt80 billion for a tender offer of all remaining shares, Charoen - through his family-owned business TCC Group - will claim ownership of all of Big C's 700 stores in Thailand.

Speculation is rife that Big C Thailand could be used as a vehicle to take over Big C Vietnam from Casino Group, just as Charoen is expanding his pool of assets in Asean and bridging the upstream (beverage and consumer goods manufacturing) and downstream (distribution) activities in his empire.

"He has dreamt of owning a retail business for a long time to support his manufacturing business," a source in the Thai retail industry said yesterday.

In the upstream business, Charoen has spent years developing logistics networks, not only in Thailand, but also in many strategic Asean markets including Vietnam and Malaysia. With Big C, he has plenty of shelves for his products.

The source noted that an acquisition was an easy way to enter the Thai retail market, given fierce competition. With a brand, Charoen can also put his vast landholdings across the country to good use.

That explains why he bid for Carrefour in 2011. The deal fell through, with Big C winning the race. He kept looking while expanding the upstream market.

In 2011, Thai Beverage, the flagship company of his empire, took over Sermsuk - a bottler that boasts the most extensive logistics network in Thailand. Another deal was clinched in 2013. At a price of $11.2 billion, he took control over the soft-drink, dairy and publishing businesses of Singapore-based Fraser & Neave.

But squeezed margins on the home turf convinced local market players that Charoen would not stop here.

A veteran retailer sees Charoen aiming big in Vietnam, where demand should be sufficient for all types of store formats - from hypermarkets to supermarkets and convenience stores - that Big C has operated successfully in Thailand.

This would complement Metro, a cash-and-carry chain in Vietnam that was just scooped up in January for $711 million, the retailer said.

An analyst at Asia Plus Securities is convinced that Charoen's next move is to bid for Big C Vietnam.

The country could be a major market for the group given its rapid economic growth and relatively lower competition in the modern trade business. Big C Vietnam, estimated at Bt30 billion, now operates 32 outlets.

Banks upbeat

With slack loan demand on the domestic front, the deal gave a psychological boost to banks.

Patchara Samalapa, executive vice president of Kasikornbank, said the bank was ready to provide assistance with any kind of financing model proposed by TCC.

Pimolpa Suntichok, first executive vice president of Siam Commercial Bank, said a bridge loan should be the first step for TCC in paying the huge cash price to the seller. After that banks will offer financial restructuring to TCC to help ease its financial burden.

"We have room to finance TCC because we don't have problems with a single lending limit to TCC Group," she said.

TCC is expected to finance the deal with its own cash and loans.

In 2013, three Thai banks - Bangkok Bank, Krungthai Bank and SCB - joined four foreign banks in extending a Bt180-billion bridge loan to CP All for the acquisition of Siam Makro. The loan maturity was 18 months.

Most bankers expected TCC to require a similar facility.

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