Retailers jump in for Carrefour Southeast Asia assets

At least four retailers from Europe and Asia are poised to submit first-round bids for Carrefour SA's roughly $1 billion-worth of Southeast Asian assets on Wednesday, sources said, showing robust demand for the retail operations. France's Carrefour, Europe's top retailer, is exiting Singapore, Malaysia and Thailand to focus on markets where it has a leading position, sources with knowledge of the matter have previously told Reuters.
The race has drawn in France's Casino Guichard Perrachon SA and Britain's Tesco Plc as well as regional players like Dairy Farm which owns Giant and Cold Storage chains in Southeast Asia, sources said. Japan's No 2 retail group Aeon has also thrown its hat into the ring, sources said on Wednesday, and appointed Nomura to advise it on its bid. Acquiring Carrefour's 40 stores in Thailand, 19 in Malaysia and two outlets in Singapore would almost triple Aeon's chain in the three countries to 99 stores.
Aeon will make one bid for Carrefour's Malaysian and Singapore stores, and a separate bid for the outlets in Thailand, according to the three sources, who were not authorised to speak on the matter publicly. Other parties said to be interested in the sale included, Thailand's Berli Jucker Pcl and Thailand's biggest energy company PTT Pcl.
The appeal of Carrefour's Southeast Asia chains lies in an expected acceleration of consumer spending in the three Southeast Asian markets due to strong economic growth. Several strategic buyers are hoping to consolidate their positions in these countries.
"Any buyer of these assets would have to increase profitability by 3-4 times to achieve a cost of capital return," said London-based RBS analyst Justin Scarborough He said the $1 billion sale tag "seems rather high" at around one times sales for businesses with relatively low margins. Thailand, where Tesco is a leading player in the hypermarket or superstore segment and Carrefour is No 4, likely is the most sought-after assets followed by Malaysia, according to a source with direct knowledge of the deal.