CP All Shareholders Approve 189 Billion Baht Siam Makro Deal

CP All Pcl shareholders approved the Thai retailer’s 189 billion baht ($6.1 billion) acquisition of Siam Makro Pcl, the country’s biggest ever takeover.

About 87 percent of shareholders who attended today’s meeting in Bangkok voted for the proposal, more than the 75 percent required, said Supot Shitgasornpongse, the company’s secretary. CP All, controlled by billionaire Dhanin Chearavanont’s Charoen Pokphand Group, offered 787 baht a share for Siam Makro, the Bangkok-based retailer said on April 24.

Dhanin is trying to reassemble his retail empire after earlier selling control of the membership-warehouse chain he founded. He’s offering about 53 times Siam Makro’s earnings last year, more than double the average for 20 retailer takeovers in emerging Asia announced over the last five years, data compiled by Bloomberg show.

“CP All would significantly strengthen its domination in Thailand’s commerce industry by expanding into the cash-and-carry business,” said Jintana Mekintharanggur, who helps oversee about $200 million as director of equities investment at Manulife Asset Management Co. Synergies may provide a “justification for paying that expensive price,” she said.

Dhanin is buying companies at home and abroad, accounting for more than half of the record $31 billion in total deals announced this year in Thailand, including CP Group’s purchase of a $9.4 billion stake in China’s Ping An Insurance (Group) Co.

Biggest Acquisition

Dhanin has a net worth of $6.5 billion, according to the Bloomberg Billionaires Index. Many of his assets are owned through closely-held holding companies that he shares with his three brothers. Dhanin’s net worth calculation excludes the stakes held by his brothers, Jaran Chiaravanont, Montri Jiaravanont and Sumet Jiaravanon.

The Siam Makro purchase is the largest on record for Thai companies. CP All had cash and cash equivalents of 35 billion baht with no debt as of March 31, according to the company’s financial statements.

“In the short term, Siam Makro’s earnings contribution wouldn’t be sufficient to cover funding costs,” Chaiyatorn Sricharoen, an analyst at Bualuang Securities Pcl, said in a note yesterday. Still, CP All will gain long-term benefits including added bargaining power with suppliers and pooling purchases of raw materials, he said.

CP All and Siam Makro management will meet next month “to discuss how we can implement the synergy, such as in material purchases,” Chief Executive Officer Korsak Chairasmisak told reporters after today’s meeting. “Siam Makro’s main overseas expansion will be in neighboring countries of Laos, Myanmar and Cambodia.”

Asian Crisis

The acquisition of Siam Makro tops the $5.5 billion purchase of PTT Aromatics & Refining Pcl by PTT Chemical Pcl in 2011 to become the largest on record in Thailand, data compiled by Bloomberg show.

Dhanin and SHV founded Siam Makro in 1988, according to the company’s website. CP All agreed to buy SHV’s 64 percent stake for 787 baht a share and will make a tender offer to other shareholders at the same price, it said.

Charoen Pokphand was once Siam Makro’s largest shareholder with a stake of as much as 47 percent in 1997, the same year that the devaluation of Thailand’s baht triggered a financial crisis that pushed many Asian economies into recession.

After the crisis, Dhanin sold stakes in companies including Siam Makro and Lotus Supercenter, which was bought by Tesco. In May 2005, a Charoen Pokphand unit sold 7 percent of Siam Makro back to the company that controlled the retailer for 60 baht per share.

Siam Commercial Bank Pcl is advising CP All on the acquisition and HSBC Holdings Plc is advising SHV Holdings NV, Siam Makro’s biggest shareholder.