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Green light trade competition exposure board CP buys Tesco Lotus 3.38 billion, declares no monopoly, adds 7 conditions, prohibits additional retail mergers within 3 years, opens channel to expand e-commerce investment, boosts empire from magnate CP “Thanin There is a full retail model, expected to send” Naris Thamkuekul “to control the supplier and distributor. The dreaded downside of bargaining power
The acquisition of shares of Tesco Store (Thailand) Co., Ltd., which owns a majority stake in Ek-Chai Distribution System Co., Ltd., the executive of the department store “Tesco Lotus” by CP Retail Development Under the Charoen Pokphand Group (CP), which is considered a great deal of the year by CP Group, has invested 3.38 billion baht to pursue a comprehensive retail business since March 2020, receiving an official green light. already
No later than November 6, 2020, the Commercial Competition Commission (ABC) approved the CP group purchased the Tesco Lotus business with 7 required conditions
It is not a monopoly, it does not harm the economy
Mr. Somsak Kiatchailak The Secretary General of the Commercial Competition Commission revealed that the Commercial Competition Commission (ABC) has considered the application for a business combination license between CP Retail Development Co., Ltd. and Test Co., Ltd. Go to the store (Thailand)
By the majority of the committee members that The merger has allowed the operators to apply for a business combination to gain dominance in the modern retail market. It has more market power. But not a monopoly. And such a business combination is necessary, as it should be a business. And bring more profit to business promotion
And it can result in a significant reduction in competition. But it does not cause serious damage to the economy. In addition, it does not affect the essential interests that must be obtained from the general consumer, however, it is necessary to establish measures to reduce or mitigate the potential impact on competition in the market after the business combination.
Open 7 conditions to merge
Therefore, it approved the business merger between CP Retail Development Co., Ltd. and Tesco Store (Thailand) Co., Ltd. with the following terms and conditions:
(1) It is forbidden for the commercial operator to be allowed to combine business and Same business unit Conducting business with other entrepreneurs in the modern wholesale retail, consumer products 3 years excluding e-commerce market
(2) Allow CP All Public Company Limited and Ek-Chai Distribution System to increase the share of SME sales, consisting of community agricultural products, community enterprises or OTOP 10.% Per year for a period of 5 years
(3) It is prohibited for commercial operators authorized to combine companies and entrepreneurs who have the condition of being the same business unit. Sharing information or exchanging marketing information, etc., which is considered a trade secret.
(4) Ensure that Ek-Chai Distribution System Company Limited maintains the terms and conditions of the contracts and agreements between the producer and original distributor of products or raw materials. For a period of 2 years unless the contract is changed to the manufacturer or supplier
(5) Give CP All Plc., Ek-Chai Distribution System Co., Ltd., to assign a credit term of 30 to 45 days to suppliers. For a period of 3 years as agricultural products 30 days and other products not exceeding 45 days
(6) Let 2 companies report quarterly results to ABC for 3 years.
(7) Establish standards of good business practices (code of conduct) and publicize them. And meet the above-mentioned standards As well as the ABC announcement.
No monopoly
Mr. Prasit Boonduangprasert Chief Executive Officer Charoen Pokphand Foods (CPF) revealed “Prachachat Business” after the merger. Causing the number of merchants (players) in the retail market to actually decrease If only in the convenience store part It is true that 7-Eleven stores have the most branches. But this type of store has many operators. Including Family Mart, Lawson, CJ Mart, and there are 5-700 thousand local stores, while CP Fresh Mart has only 300 branches, very few.
“If you ask us, we will have an advantage because the CP Group will have Makro, Lotus, Seven, CP Fresh Mart, or not, I think people will look like this. But it should be noted that each type of retail has its own duties. Each category has different groups of customers. Different people perform different functions “
However, there will be opportunities to sell products through the Tesco branches in Thailand and Malaysia (in Thailand, 1.3 thousand convenience stores, 94 stores, 431 hypermarkets and 76 abroad). I can do it anyway. This deal is like an investment in building a long-term relationship. I was hoping there would be more products from Thailand to sell to Malaysia.
Don’t fake the supplier.
The item that CPF produces will have an advantage over other livestock producers. Let me give an example of a case where CP purchased Makro before. Products from other manufacturers are also available for sale from Makro. Also, some third-party products have more sales than CPF. That’s because the retail goal is to create a variety of options for consumers.
“Can we sell more with this deal? Let’s say we already sell a lot at Tesco, like filter products. It has a 70% market share even though it hasn’t merged. But of course after the merger it should allow more companies. in the same group. Meeting together would be more convenient “
Separate income clearly, see results in 64
Mr. Prasit said If the merger is successful in the fourth quarter of this year, we expect to see a clear picture of operations early next year. But the income that will arise after the merger will not be combined with the income of CPF. Because it has a 20% stake according to the law, if not more than 25% it will not be counted
In this regard, an investment of 3,380 million baht to invest in Tesco Store (Thailand) Company Limited and Tesco Store (Malaysia) Company Limited through CPRetail Holding Company Limited. One hundred billion baht is divided into 40% held by CP All, Charoen Pokphand Holding 40% and CP Merchandising or CPF has another 20%.
Supporting CP Retail with the Highest Strength
A source from the midsize retail industry was revealed. “Prachachat Business” which after the merger to take place Will make the retail business group of the CP Seven Eleven convenience store There are stores with more models. From the original that there were only convenience stores AND wholesale business, cash & carry (Makro), from now on there will be hypermarkets Supermarket and Tesco Lotus Express are also several convenience stores. At the same time, it will Seven Eleven. There is a space rental business in a different way.
While Charoen Pokphand Foods Plc. Or CPF with products and products under the CP brand A wide variety of fresh foods such as pork, duck, chicken, eggs, shrimp, etc., processed foods, ready-to-eat foods. Benefit from placing more food products through the Tesco network in addition to existing channels
In addition to the long-term vision, this agreement will benefit the growth of the CP Group retail business in terms of cost reduction and functionality or synergy. CP group retail be strong Both in terms of having a complete point of sale model Has the number 1 market share of all forms in the country
With more than 14,000 branches and a total market share of more than 40% of the modern commercial department stores of about 30%, including overseas branches will be increased to 75-76 branches of the original 7 branches in particular. In Malaysia Originally it had branches in Cambodia, Myanmar, China and India, the main ones being Makro. Another important thing is it helps to increase the bargaining power with superior suppliers.
However, with the number of 7-Eleven and Tesco Lotus Express convenience store model stores, there are many overlapping branches opening in the area. Preliminary group CP may consider dissolving or merging a branch. To reduce redundancy and reduce costs, ”said the source.
Suppliers – distributors, vacuum pumps
The reporter reported that Throughout the past week Retailers, especially suppliers And large wholesale retailers in other provinces Pay close attention and closely follow the merger between CP Group and Tesco Lotus.
Revealed a font from a mid-size manufacturing and distribution company. “Prachachat Business” said that the supplier circle is now very active in this matter. Due to the view that the merger will make the retail group. CP has more business negotiating power.
Many people are now preparing and finding ways to cope to some degree. One way that providers see it in a similar light is by balancing ports to reduce risk. Using a traditional commercial channel. Large wholesale retailers that are local entrepreneurs Including online channels that are increasingly popular today.
While news sources from major wholesale retailers in the Isan region said of the CP retail group’s bargaining power that has more Including the number of branches covering more areas will affect the operator AND local retail operators also have to accelerate to adapt . The little ones could not compete on price. Due to the different order quantity The higher the bargaining power, the more you order, the lower the price. And it can be used to make a price.
CP organized an army ready to go
High-level affiliate news source CP disclosed “Prachachat Business” said the company has been preparing to acquire Tesco Lotus since early last year. Both in the search for loans from financial institutions both in the country and abroad. Including preparation for personnel matters Positions of the people who will take care of the management of Tesco Lotus
In the part of the executive that was placed, it is expected that it will be Dr. Naris Thamkuekool, who currently holds the position Director Human Resources Charoen Pokphand Group AND Deputy General Director of Retailink (Thailand) Co., Ltd. In addition, in the past he was Deputy Managing Director of CP All Public Company Limited.
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