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Bangkok Retail – Makro Back in the Fold

By on Jan 03, 2014 in Property News

Dhanin’s bold move this year to take back what he lost in 1997 has raised many eyebrows, but the tycoon has no doubt. By Krissana Parnsoonthorn

Dhanin Chearavanont made headlines in late April when his convenience-store arm CP All Plc surprisingly acquired Siam Makro’s cashand-carry store chain at 188.88 billion baht.

It was the biggest takeover in Thailand and the largest in Asia’s retail industry.CP All, operator of the 7-Eleven chain,bought a 64.35% stake in Siam Makro from the Netherlands-based SHV Holdings NV at 787 baht a share.

Many analysts viewed the historic deal was very costly for CP All. But Mr Dhanin,head of Charoen Pokphand Group (CP),said although the price might seem very expensive today, it would not look that way in the future.

To finance the deal, CP All arranged a US$6-billion bridge loan from HSBC Holdings, Siam Commercial Bank, Standard Chartered Bank and Sumitomo Mitsui Banking Corp.

Mr Dhanin said he decided to acquire the cash-and-carry store operation because he himself has a close relationship with SHV Holdings.

Moreover, CP was no stranger to Siam Makro. It held 47%, the largest stake in the cash-and-carry chain in 1997, the year the baht was floated, triggering a financial crisis that pushed many Asian economies including Thailand into recession.

During the financial crisis, CP sold its holdings in many retail operations including Lotus Supercenter and Siam Makro.

Later, SHV Holdings, a privately held trading group, had a global policy to pull out of the retail business, so it decided to sell its stake in Siam Makro.

Currently, Siam Makro operates 57 Makro stores and five Siam Frozen stores nationwide. Its revenue stood at 112 billion baht in 2012, expected to rise by about 15% in 2013.

After the acquisition, CP All aims to create a synergy by pooling resources of the two.

Already Thailand’s largest convenience store chain, CP All has 7,100 outlets and projected revenue of about 210 billion baht in 2013, up from 188 billion baht in 2012.=

The size of its network is hard to match.7-Eleven can be found on every corner and with a 24-hour service and a plan to have a total of 10,000 stores in the next two years, there is little CP All cannot do to serve the entire Thai population.

For the full article, please visit http://bit.ly/JMLgjz

Source | Bangkok Post 31 December 2013

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