Carrefour to sell off SEA stores

The process is in its earliest stages and Carrefour is working with Goldman Sachs and UBS to manage the auction. Both corporate and private equity investors are expected to participate in the bidding process, reports note, which may begin as early as September.

Among the corporate contenders cited are British brand Tesco; Japan’s Aeon Co.; Dairy Farm International Holdings Ltd. from Hong Kong; and Thailand’s Big C Supercenter Pcl.
The retailer aims to garner $800 million to $1 billion for its collective Southeast Asian assets; however Carrefour would consider selling its market-specific stores separately pending interest. Reports value Carrefour’s Thai business as much as $600 million, while the Malaysian and Singapore operations may be worth $400 million.

Earlier this year, CVC Capital Partners' $773 million purchase of a controlling stake in the department store arm of PT Matahari Putra Prima shined an especially bright spotlight on the opportunities for retail sector plays in Southeast Asia. At the time of the Matahari deal, the group had 88 stores in 45 cities. With over 70 cities in Indonesia surpassing the one million population mark, even dominant players see easy access to new consumers with the right cash-rich parent.

According to the Carrefour, it has 39 hypermarket stores in Thailand, 20 in Malaysia and two in Singapore. Reports further note that Malaysia, Singapore and Thailand attributed to 4.5%, 1.2% and 8.7%, respectively, of Carrefour’s Asian sales in 2009. The company has operations in China and Indonesia – its two largest markets in Asia Pacific – which it plans to keep.

The sale of selective SEA assets comes as part of the group’s regional restructuring. In 2005, Carrefour sold its eight Japan-based stores to AEON Group in Japan, and one year later the company sold its 32 South Korean hypermarkets to E-Land in South Korea, where it was rebranded as Homever.

In 2000, Carrefour closed its Hong Kong stores just four years after they opened. Press at the time cited discrepancies between the company and product manufacturers for the exit, though Carrefour officially attributed the move to “difficulties in finding large sites suitable for developing its hypermarket concept.” Rumor has long held that hypermarket chains – Carrefour, Tesco, Waitrose, etc – that would potentially undercut chains owned by Hong Kong’s well-established conglomerates are either kept from entering the market or somehow find it “difficult” to rent retail space.

Following the speculation that Carrefour would sell its Malaysian, Singaporean and Thai assets, reports circulated that the company would close shops in the three countries. Carrefour refuted the rumors, noting that it aimed to further expand in Malaysia. Reports suggest that the sale of its assets in the three markets could bolster Carrefour’s efforts in China and Indonesia, where it enjoys high growth potential.

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• Topics
• Southeast Asia
• Consumer
• CVC Capital Partners
• Goldman Sachs