BJC Dips Nearly 5% over the Report of Taking Over “Tesco” with ฿300bn of Investment

The share price of Berli Jucker Public Company Limited (BJC) plunged ฿2.00/share or 4.62% to ฿41.25/share at the closing of the morning session on December 30, 2019, amid the positive trading session of SET Index.

 

The reason for the plummet of BJC could have been the news reported over the weekend on Thai tycoons were looking to buy Tesco’s business in Asia, and one of the mentioned tycoons was Mr. Charoen Sirivadhanabhakdi from TCC Group, the number one major shareholders of BJC.

Charoen Pokphand Group of Thai billionaire Mr. Dhanin Chearavanont and Central’s Chirathivat Group also expressed their interest in this offer.

 

Tesco said in December that it is carrying out a strategic review of its Thai and Malaysian businesses after receiving interest. A sale of the Asian operations would allow the supermarket chain to get an infusion of cash to continue a restructuring of its core U.K. business that has cut thousands of jobs.

Tesco is expected to call for initial bids for the businesses as soon as next month, the people with knowledge of the matter said. Companies might decide against making any offer as deliberations continue.

Tesco has more than 2,000 hypermarkets and convenience stores in Thailand under the “Tesco Lotus” brand. The chain was founded by CP Group in 1994 and later taken over by the British firm, according to its company website. In Malaysia, Tesco has over 70 shops, according to its annual report. Malaysian conglomerate Sime Darby Bhd owns a 30% stake in Tesco Malaysia.

Currently, the estimated value of Tesco in Thailand is approximately 10,000 million dollars or around 300,000 million baht.

According to the data from the Department of Business Development Ministry of Commerce, Tesco business in Thailand has a total revenue of 189 billion baht in 2019 with a net profit of 7,800 million baht, downed from total revenue of 198 billion baht and a net profit of 9,600 million baht a year earlier.

 

BJC has a net profit for the operation of 9-month period of 2019 at 4,805.67 million baht, 6,649.97 million baht of profit in 2018 and 5,210.76 million baht of profit in 2017. Meanwhile, BJC has cash on hand as of 30 September 2019 at an amount of 3,623.05 million baht while it has a total asset of 116,670 million baht.

The interest in purchasing Tesco might be the reason for the plummet of BJC in the morning session due to a lack of cash on hand which could lead to a capital increase in the end. Nevertheless, there has yet to be any confirmation from BJC on how and which way will the company approach this deal.

 

In addition, BJC, controlled by TCC, bought a controlling stake in Casino Guichard-Perrachon SA’s Thailand supermarket chain Big C Supercenter Pcl for $3.45 billion or around 122,400 million baht in 2016. Big C is the country’s second-largest supermarket chain behind Tesco Lotus.