VietNamNet Bridge – Owners of leading Thai retail groups are pushing ahead with aggressive expansions into Vietnam’s retail market.

According to foreign media, Thai billionaire Dhanin Chearavanont, chairman of Charoen Pokphand (CP) Group held negotiations with Germany’s Metro Group AG to buy Metro Cash & Carry in Vietnam, in a deal that could be valued at more than US$500 million.

However, the negotiations were unsuccessful because the German Group rejected the move and affirmed that Metro had no interest in giving up Vietnam’s potential market.

“Metro’s decision will make CP, controlled by Thailand’s richest man, all the more eager to return to negotiations. Chearavanont is known for his patience to pursue deals,” said a broker in M&A.

In April, 2013, CP All, a subsidiary of CP Group, Thailand’s largest mini-mart chain, spent more than US$ 6.6 billion buying the Thai discount chain Siam Marko. The fee is considered to be well over the odds as Siam Marko was valued at the time at US$5.7 billion.

Founded in 1988, Siam Marko owns around 60 supermarkets in Thailand. In 2012, the company had turnover of US$3.9 billion, up 15% on 2011. Profits also increased by 3.6 billion baht, a 37% increase.

According to experts in the industry, the deal proved CP Group’s ambition to expand investment in their home country as well as neighbouring countries.

Korsak Chairasmisak, managing director of CP All, said Thailand wanted to take advantage of the ASEAN Economic Community (AEC) due to become active in 2015.

Thanks to AEC, CP All experts to be able to introduce Thai small and medium-sized enterprises to wider ASEAN market.

“Although Thailand’s exported products are in great demand, CP All still needs more effective distribution channels. Siam Makro will be a distribution channel supplying agricultural goods, such as fresh food and frozen meat to ASEAN countries,” added Chairamisak.

Previously, Thailand’s Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, bought Vietnam chain Family Mart’s 42 outlets to set up a joint venture with Vietnam’s Phu Thai Group.

“It took us just three years to achieve sales of US$ 324 million in Vietnam, it took 120 years in Thailand before we reached that milestone,” declared Techajaroenvikul.

Over the past few years, BJC has hunted good opportunities to increase its presence on the international retail market and expand more outlets in Thailand.

Techajaroenvikul, chairman of BJC said that now competition is intensifying in the Thai market, Berli Jucker is shifting its focus to Vietnam’s retail market instead. “As our retail business is in its infancy, we are not as competitive as others in the domestic market,” he added.

Phu Thai and BJC recently launched B’mart, with Phu Thai saying that details of the deal would be published officially in September this year.

The province acquisition of a 65% stake in Thai An Joint Stock Company, a distribution and logistics firm for food and non-food products in northern Vietnam, will extend Berlin Jucker’s distribution network and sales in Vietnam and neighbouring countries. Thai An has a presence in 63 cities and provinces, and its network comprises 200 sub-distributors, 2,500 wholesales and thousands of retailers in traditional markets.

Source: VIR