Thailand-Malaysia-Singapore company-takeover Carrefour

Sunday, 3 October 2010 22:26 -     - {{hitsCtrl.values.hits}}

BANGKOK,  (AFP) - A bidding war is heating up for Carrefour’s supermarkets in Thailand, Malaysia and Singapore as the French retail giant plans its exit after failing to take a dominant position in the region.

Carrefour, the world’s second-biggest retailer behind US colossus Wal-Mart, is looking to offload its 43 Thai, 23 Malaysian and two Singaporean hypermarkets in a sale some estimates suggest could net a billion dollars.

Analysts believe Carrefour’s eagerness to sell up reflects the fact that, despite its large foothold and the robust health of the markets, the firm has trailed competitors such as Britain’s Tesco in terms of market share.

“Carrefour is the second-biggest retailer in the world. Perhaps being in last place in Thailand is a reason they want to sell their business here,” said Jit Siratranont, deputy secretary general of the Thai Chamber of Commerce.

One European banker went further.

“They did not succeed in achieving their goal and getting themselves in a dominant position,” he said, but “there is every indication that the market is promising because there are many contenders” to buy the stores.

Carrefour refuses to comment on the matter, but it acknowledges that it is ready to consider offers in the countries where it is not a market leader and has little prospect of becoming one.

It is therefore likely to cede its network in these three major markets, which enjoy steady growth and can rely on a combined population of over 100 million people.

Potential buyers are circling, with a second round of bidding expected by November.

“The long-term potential for these assets makes them worth investing in,” Jon Wright, a London-based retail analyst with market intelligence firm Euromonitor International, told AFP.

With a supply chain in place, the task for buyers would be to improve margins to boost profits, he said.

According to Wright, the supermarket sector in Asia was worth 389 billion dollars in 2009 and is expected to grow by 3.3 percent a year between now and 2014, compared with around 2.1 percent growth forecast globally.

In Thailand, a raft of international players have been linked to the bidding in recent weeks, including retailers Tesco, Japan’s Aeon and France’s Casino.

Thai companies have also been tipped as potential buyers, including retailer Central Group, consumer goods and manufacturing firm Berli Jucker PCL and majority state-owned energy giant PTT.

PTT however recently indicated it was not interested, while the Wall Street Journal has reported Aeon -- which snapped up Carrefour’s Japanese assets in 2005 -- as well as Tesco were struck off for bidding too low.

According to Kim Eng Securities strategist Mayuree Chowvikran, Berli Jucker PCL and Casino are likely to be the key bidders in Thailand.

Singapore may be a smaller market but it has an affluent population, including a large expatriate community.

“Those who know how to adapt to the local market are doing relatively well. Despite the competition, there is still money to be made” in the city-state, said Song Seng Wun, a regional economist with Malaysian bank CIMB.

Malaysia also appears to be drawing interest, with deputy trade minister Mukhriz Mahathir telling AFP in August that “other hypermarkets are keen to take over” Carrefour’s business in the country.

“There are many suitors,” he said.

Carrefour has, paradoxically, recently announced the opening of two new stores in central Selangor state in Malaysia.

Manokaran Mottain, senior economist at AmResearch, said he believed Malaysia offered some interesting opportunities as “the retail market is doing well with domestic spending looking good.”He believed the motivation behind Carrefour’s desire to retreat from the market could either be because they are over-stretched, or that they are on the look-out for yet more lucrative markets.

“Definitely India will be a great market. India can provide Carrefour with great potential,” he said.

Carrefour will open its first wholesale megastore in Delhi in November and said it has already been in discussion with potential partners over opening traditional hypermarkets there.