Thai tycoons set to go head-to-head as Tesco invites bids for $9b Asia biz

Groceries in a shopping cart move through a food aisle at the Tesco Basildon Pitsea Extra supermarket, operated by Tesco Plc, in Basildon, U.K., on Tuesday, Dec. 1, 2015. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

British retailer Tesco 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, which operates some 130 stores and over 10,000 7-Eleven convenience stores under CP ALL.

Sirivadhanabhakdi’s TCC Group, through Berli Jucker, 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.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.