Thai billionaire Dhanin secures funding for Tesco’s hypermarkets in Asia’s biggest M&A deal this year

UBS, JPMorgan and Siam Commercial Bank to underwrite acquisition finance in support of CP Group’s bid for Tesco assets in Thailand, Malaysia, sources say

Deal value is the biggest in Asia excluding Australia so far this year as tycoon builds on his dominance at home

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Published: 11:15am, 11 Mar 2020Updated: 11:15am, 11 Mar 2020

Thailand’s biggest conglomerate Charoen Pokphand Group has locked in funding for its proposed acquisition of Tesco’s businesses in Thailand and Malaysia for US$10.6 billion, allowing its billionaire owner to build on its dominance at home and expand in the region.

CP Group has turned to JPMorgan Chase, UBS and Siam Commercial Bank to underwrite the deal, according to people involved in the discussions. The transaction, if approved, represents the biggest merger and acquisition deal in Asia excluding Australia this year, and topping the pending US$6.2 billion Wheelock & Co privatisation, according to financial data provider Refinitiv.

The British grocer on Monday agreed to sell its hypermarket businesses in Thailand and Malaysia to CP Group for an enterprise value, including debt, of US$10.6 billion. The deal also marks the biggest acquisition by owner Dhanin Chearavanont at home, recapturing the retail chain it established in 1994 and sold to Tesco during the Asian financial crisis.

The financing commitments show global investment bankers are prepared to back one of Thailand’s richest businessmen even as the regional economy is suffering from the impact of a coronavirus outbreak. The epidemic has deepened the slowdown in the Chinese economy, where CP Group has made some of its biggest bets, including stakes in Ping An Insurance, Zhengxin Bank and Citic Group.

The Tesco Lotus retail chain was established in Thailand in 1994. Photo: Reuters

JPMorgan, UBS and Siam Commercial Bank plan to syndicate the loan to other lenders at home and around the region, the people said. Chinese banks could also be interested in the syndication, one of the people said.

One factor that might make some banks hesitate to join the syndicate of lenders is that the tourism-reliant Thai economy is reeling from the spread of the new coronavirus as travellers stay away. Tourist arrivals fell 44.3 per cent in February from a year earlier due to the epidemic, the government said.

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