Casino Guichard-Perrachon SA has agreed to sell Vietnam’s Big C grocery chain to Central Group at an enterprise value of 1 billion euros (US$1.1 billion), extending an Asian divestment program aimed at reducing the French retailer’s debt.
Casino is to receive 920 million euros in proceeds, the St Etienne, France-based company said in a statement yesterday. The disposal would bring its total divestments to 4.2 billion euros, it said.
The deal follows Casino’s agreement earlier this year to sell control of Thai supermarket chain Big C Supercenter Pcl to billionaire Charoen Sirivadhanabhakdi’s TCC Holding Co for 3.1 billion euros.
“This is another piece of good news for Casino,” Sanford C. Bernstein analyst Bruno Monteyne said.
“We expect the high valuation to act as a catalyst for the stock. This comes as welcome news after some were suggesting the sale wouldn’t go through after Lotte had pulled out,” Monteyne said.
South Korea’s Lotte Group said on Friday last week that it would not pursue the asset, without giving a reason.
Casino is selling assets in Asia and Latin America to cut debt, while focusing on price and convenience in its largest market, France, as it competes for growth amid weak consumer spending.
Rising retail sales and booming foreign investment are helping the Vietnamese economy expand.
Achieving the government’s growth forecast of about 6.7 percent this year would make the Southeast Asian nation one of the fastest-growing markets in the world.
“The retail market is booming here,” said Ralf Matthaes, managing director of consultancy Infocus Mekong Research in Ho Chi Minh City. “The bottom line is every Tom, Dick and Harry is trying to come in here. You’ve got a young population. They like to go shopping, they like the convenience of it all and they can afford mid-level range products now.”
Vingroup Joint Stock Co, Vietnam’s biggest listed property developer, planned last year for its Vinmart unit to open 100 supermarkets and 1,000 convenience stores by next year, according to state media Vietnam News.
Matthaes said it’s a crowded field and many supermarkets and convenience stores are not profitable.
“The Vietnamese guys are opening left and right. They’re not making money, but they’re looking to sell,” he said.
Lotte Group said last year that it plans to open 60 supermarkets in Vietnam by 2020. The South Korean retail giant also runs Lotteria fast-food chains, shopping malls, hotels and cinemas in the country.
TCC in January completed the purchase of Metro AG’s Cash & Carry wholesale business in Vietnam for 655 million euros.
“Vietnam’s retail market is still in its infancy,” Bloomberg Intelligence analyst Thomas Jastrzab said. “This makes it attractive to retailers looking for fast growth potential.”
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