Tesco’s board was set to meet this weekend to finalise plans to sell the UK supermarket chain’s Thai and Malaysian operations, in a deal that is expected to fetch around $10bn, according to people close to the discussions.
Three Sino-Thai family conglomerates are in the running to buy Tesco’s south-east Asian Lotus business.
They are Charoen Pokphand, Thailand’s biggest conglomerate presided over by Dhanin Chearavanont; Central Group, the giant retailer controlled by the billionaire Chirathivat family; and TCC Group, whose chairman Charoen Sirivadhanabhakdi controls ThaiBev and the Big C supermarket chain.
Some representatives from the Thai groups have been staying at London’s Rosewood Hotel since last this week, as they compete in a process that one adviser called a “shootout”. Over the past week, Tesco and its bankers at Goldman Sachs and Greenhill have been meeting in London with the bidders to discuss their offers.
The outcome of the bidding war remains unclear. Central Group has made an offer in excess of $9bn, according to those briefed on the matter. Meanwhile, CP has made a proposal above $10bn, those briefed about the matter added. TCC’s offer could not be immediately determined, but Bloomberg reported that it recently raised a $10bn two-year loan to finance its bid.
Mr Chearavanont is viewed as the most keen to buy, partly because CP’s Chinese-Thai family patriarch was forced to sell control of the group’s Lotus business to Tesco for $180m in 1998, during the Asian financial crisis.
However, despite tabling the highest offer, CP might still fail to win over the support of Tesco’s board as a deal with Mr Chearavanont’s group would face significant antitrust hurdles due to CP’s other holdings in Thailand.
CP already owns Thailand’s ubiquitous 7-Eleven convenience stores and the Siam Makro cash-and-carry chain. By adding Tesco’s supermarket outlets, CP would have a full suite of retail offering, increasing the market power of what is already one of Asia’s largest conglomerates.
The other two rival groups also have large retail footprints, and Thailand’s antitrust watchdog has given notice it will scrutinise any bid carefully.
Sakon Varanyuwatana, chairman of Thailand’s Office of Trade Competition Commission, told the FT in January that his office planned to “consider the operation 360 degrees” after any proposed acquisition, and was prepared to exercise its power to block any proposed deal if it thought it would create a monopoly.
Tesco, CP, Central Group and TCC could not be immediately reached for comment. Tesco’s sale of its large Thai and smaller Malaysian operations is expected to be one of Asia’s biggest M&A transactions this year.