Thai tycoon adds to record debt pile with $6.6 billion Siam Makro offer

Tue Apr 23, 2013 3:40am EDT
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By Khettiya Jittapong and Saeed Azhar

BANGKOK/SINGAPORE (Reuters) - Thailand's richest man is offering $6.6 billion to buy cash-and-carry wholesaler Siam Makro Pcl from Dutch firm SHV Holdings, the biggest Asia-Pacific M&A deal announced this year, adding to his debt load to grab more of the buoyant Thai retail market.

The country's biggest convenience store chain CP All Pcl (CPALL.BK: Quote), controlled by Dhanin Chearavanont, is gunning to push deeper into Thailand's $80 billion retail sector just two months after Dhanin completed a deal to buy a $9.4 billion stake in Ping An Insurance Group of China from HSBC plc (HSBA.L: Quote).

The more than $11 billion in loans that Dhanin-backed entities alone have taken on this year is, for Thailand, the largest offshore borrowing amount ever recorded by Thomson Reuters-LPC data, which goes back to 1992.

The latest deal, primarily funded by a $6 billion loan, will combine the operators of Thailand's biggest convenience stores and cash-and-carry businesses, giving CP All greater bargaining power in sourcing supplies and the muscle to expand in Southeast Asia.

"This is a format that has been very successful in Thailand and could be rolled out to Southeast Asia more generally," said David Chin, co-head of investment banking in Asia for UBS UBSN.VX, which was among the lead arrangers for CP All for financing of the Siam Makro Pcl MKRO.BK transaction.

Thai companies have been on an acquisition binge in the last two years, encouraged by cheap bank debt, rising cash piles and surging share prices. That took Thai M&A volume to a record $25.9 billion last year.

CP All holds more cash than all but one Southeast Asian retailer, according to Thomson Reuters data, with $1.15 billion in cash and equivalents, just behind SM Investments (SM.PS: Quote) which has $1.8 billion. The world's third-largest operator of 7-Eleven stores, CP All aims to have 10,000 of the outlets in Thailand by 2018.

Dhanin and SHV founded Siam Makro in 1988, and by 1997 Dhanin's Charoen Pokpphand (CP) group was its biggest shareholder. The crash of the Thai baht in 1997 forced Dhanin to sell holdings including Siam Makro and Lotus Supercenter, which was acquired by British retailer Tesco Plc (TSCO.L: Quote).   Continued...

Dhanin Chearavanont, chairman of Thailand's largest agribusiness group, Charoen Pokphand Food, arrives at a Thailand-China Business Council Seminar in Bangkok March 15, 2013. Picture taken March 15, 2013. REUTERS/Chaiwat Subprasom