Thailand's Berli Jucker PCL (BJC) said it would seek a short term loan and may consider an equity issue to fund a planned $6.2 billion acquisition of hypermarket operator Big C Supercenter PCL , sending its shares down 5 percent.
Berli, controlled by Thai tycoon Charoen Sirivadhananbhakdi's TCC Group, said on Friday it would seek a short term loan of up to 220 billion baht ($6.2 billion) and may later aim to repay some of the debt with funds raised from an equity offering.
The loan amount is about four times BJC's market cap of 56 billion baht, raising worries of a sizeable equity issue and resultant earnings dilution, analysts said. And rising interest expenses will trim its earnings growth, they said.
The stock ended down 5 percent at 33.25 baht, while the overall market index was down 0.3 percent. Big C shares were unchanged.
"With debt to equity ratio at high level of 2 times, BJC is likely to issue new shares at higher amount than current capital. This will lead to dilution effect and affect earnings per share," said Ronnakrit Sarinwong, analyst at Country Securities.
BJC, 74 percent owned by TCC Group, will buy 58.6 percent of Big C from France's Casino Group for $3.5 billion and make a tender to buy the remaining shares from other shareholders, the Thai firm said.
The deal, subject to shareholder approval on March 21, would give Charoen group's entry into Thailand's large format retail business and well-invested supply chain, while Berli will be well positioned for expansion into Southeast Asia, the company said.
After the acquisition, Big C will still be qualified to be listed on the stock exchange, Berli said. Maybank Kim Eng Securities Pcl and JayDee Partners Ltd are independent financial advisers of the deal, it said.
Big C has a market share of 43 percent, making it Thailand's second-largest hypermarket operator after Tesco's Thai unit.