Suitors for Casino's Asia assets will have to face off against Thai tycoons


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A busy Big C outlet in southern Vietnam. Photo credit: Zing A busy Big C outlet in southern Vietnam. Photo credit: Zing


French retail group Casino's sale of its Thai and Vietnam units has drawn the eye of Singapore's Dairy Farm International Holdings and South Korea's Lotte Shopping but they'll need punchy bids to go up against deep-pocketed Thai tycoons, bankers said.
The auction represents a rare opportunity for cashed-up Asian companies to expand into what analysts say are two of Southeast Asia's most profitable retail markets, but they also warn there is a risk of overpaying, particularly in Thailand where the economy is slowing.
Central Group, Thailand's biggest retailer led by tycoon Tos Chirathivat, has pole position as it already owns a quarter of Big C Supercenter Pcl, the nation's second-largest discount retailer which it founded in 1993.
Central has said it is keen to buy Casino's 58.6 percent stake in Thailand's Big C, worth around $3.1 billion at current market prices, and Casino's wholly owned unit, Big C Vietnam, which bankers have valued at between $800 million and $1 billion.
"Whoever is going to buy this will have to pay a high price to get Central out or they will have to co-exist," said a banking source familiar with the matter.
A separate banking source said Casino was keen to sell both units to the same bidder.
In addition to Dairy Farm and Lotte Shopping discussing potential bids with banks, Japanese retail conglomerate Aeon Co Ltd (8267.T) is weighing an offer, the sources said but added it was unlikely to bid aggressively.
The sources declined to be identified as they were not authorized to speak about the matter.
Dairy Farm, the second-biggest retailer in Singapore and Hong Kong, and Lotte Shopping, South Korea's largest department store operator declined to comment. Aeon and Casino also declined to comment.
The bidder seen most likely to give Central Group a run for its money is Thai business magnate Charoen Sirivadhanabhakdi, who is keen to expand further in retail.
Berli Jucker Public Co (BJC.BK), the listed retail arm of Charoen's TCC group, has said it is interested in Casino's Vietnam unit and bankers also expect TCC to make an offer for the Thai unit.
Asked whether TCC would bid for the Thai business, Charoen told Reuters in Bangkok on Wednesday: "Not yet, we haven't done anything. We need to have a look first."
Premiums needed 
The first source said that to outbid Central for the Thai asset, other suitors would likely have to pay 270 baht per share, a 14 percent premium to Thursday's close that would value Casino's stake at $3.6 billion.
Bangkok-based AEC Securities said in a note to clients it expects bidders to pay 238-298 baht per share. Thailand's Big C shares have jumped as much as 17 percent since Casino said on Jan. 15 it has received expressions of interest..
Casino's surprise plans to sell the Thai unit came after a December report by short-seller Muddy Waters that said the French firm was "dangerously leveraged", prompting its worst stock slide in seven years. The Vietnam unit sale had been planned beforehand.
Preliminary bids for the Thai unit, which had 734 stores including 125 hypermarkets at the end of 2015, are due on Feb. 5. Bids for the Vietnam unit are due in late February, one source said.
Thailand's retail market is worth $93 billion annually, according to research firm Euromonitor. The sector trades at a price-to-earnings ratio of 24, the highest in Southeast Asia, and is no stranger to rich deals.
In 2013, CP All (CPALL.BK), backed by Thailand's richest man Dhanin Chearavanont, bought cash-and-carry wholesaler Siam Makro for $6.6 billion, valuing it at 53 times earnings in Asia's most expensive consumer sector deal by multiple.

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