TCC Group, owned by billionaire Charoen Sirivadhanabhakdi, will emerge as a leading retail chain in Thailand after buying a 58.56% stake in SET-listed Big C Supercenter Plc for 122 billion baht.
The acquisition has fulfilled Mr Charoen's dream of owning a retail distribution channel after failing with bids for Carrefour's Thai assets and Makro's cash-and-carry operations in the country in recent years.
Big C's shares surged 9.69% to 249 baht after news of the deal was confirmed yesterday.
A source said Mr Charoen paid 2-3% more than Central Group's offer to win the bidding for Big C shares because it was his last opportunity to operate such a big retail store network. Charoen Pokphand (CP) Group came third in the fierce bidding.
"The past bidding failures for Carrefour and Makro taught Mr Charoen a good lesson. This time, he could not afford to lose," the source said.
In a statement to the Stock Exchange of Thailand, Big C said it had been informed by Casino Group that Geant International BV, its major shareholder, had entered into a share sale agreement with TCC.
The agreement is for 483,077,600 shares Casino holds directly and indirectly in Big C, representing a 58.56% stake. The selling price is 252.88 baht a share.
The completion of the sale is expected by March 31.
Big C said in its statement that the total price of the shares might be reduced by an amount corresponding to the amount of dividend that might be paid by the company to the seller, pursuant to a resolution of the 2016 annual general shareholders' meeting.
The company has 125 large stores (Big C Supercenter, Extra and Jumbo), 55 Big C Markets, 394 Mini Big Cs and 146 Pure Drugstores.
An industry source said TCC Group expected its manufacturing business would benefit from the nationwide Big C store network.
Somchai Pornrattanajaroen, president of the Thai Retailing and Wholesaling Association, said TCC Group would be able to reach various customer groups with the Big C network, which includes hypermarkets, supermarkets, convenience stores and health and beauty outlets.
This increases the opportunity for TCC Group to widen its distribution channels for its products and access customers more easily.
Mr Somchai believes Central Group is likely to sell part of its 25% stake in Big C.
The industry source expects TCC and CP will compete head on in bidding to buy Tesco Lotus if its British owner decides to sell its Thai operation.
"I'm not worried about TCC, but I'm worried about CP Group. If it wins Tesco Lotus, CP will dominate the Thai retail industry. It now owns Makro cash-and-carry stores and 7-Eleven convenience stores," the source said.
Maybank Kim Eng Securities (Thailand) yesterday said in a research note the acquisition would pave the way for TCC to add value to its consumer product business.
It will also help Berli Jucker Plc and Oishi Group Plc, both of which are also owned by Mr Charoen, to gain bargaining power against modern trade buyers and boost the group's profitability, the note said.
The deal could be positive for Big C's growth, as the brokerage expects to see more aggressive expansion by the retailer.
However, Maybank Kim Eng recommends investors take profits when Big C's share price rises to a level close to the tender offer price while waiting for TCC's policy on Big C's business direction.
Pimolpa Suntichok, a first executive vice-president of Siam Commercial Bank, said TCC's acquisition was expected to use the same financial funding model as CP All's takeover of Siam Makro Plc in 2013.
TCC may seek bridging loans as short-term funding sources before transforming them into syndicated loans, she said.
Meanwhile, Big C will continue its 2016 strategic investment plan with a budget of 6-7 billion baht for store expansion and renovations, chief financial officer Rumpa Kumhomreun said.
Big C will open six hypermarkets, three Big C Markets and 75 Mini Big C stores.
BIGC shares closed yesterday on the SET at 249 baht, up 22 baht, in heavy trade worth 2.65 billion baht.