Berli Jucker’s Vietnam Metro deal stalls
Thai company Berli Jucker’s plan to buy German Metro Group’s Vietnam unit has stalled after shareholders voted down the necessary resolution at an extraordinary meeting.
BJ’s shareholders unanimously rejected the plan to spend €655-million (25 billion baht), fearing the company would face high financial and litigation risks due to additional conditions relating to the settlement of the deal.
Last August, BJ reached an agreement with the German business to buy its Vietnamese operations, 19 cash and carry stores which represent a 22 per cent share of Vietnam’s organised grocery market. BJ already has a small but growing chain of convenience stores in Vietnam, branded B’s Mart, and the Metro acquisition would give it enormous buying strength and a retail critical mass to reduce prices and increase sales of Thai products sourced from related businesses.
According to the Bangkok Post newspaper, BJ was required to deliver a letter of guarantee worth €655 million to the seller within two business days before the submission of documents to the Vietnamese government authority for the amendment of the investment certificate.
If the government required payment evidence prior to the amendment of the investment certificate, BJC would have to transfer another €655 million to Metro Vietnam’s capital account in advance.
Shareholders fear the company might have to use €1.31 billion to complete the deal.
“If the shareholders voted to support Metro Vietnam’s purchase under the new conditions, BJC would have a lot of financial burdens and risks,” Weerawong Chittmittrapap, an independent director of BJ said.
An independent financial adviser to BJ also advised shareholders the additional conditions may incur legal and financial risks to BJ.
Weerawong said BJ’s largest shareholder, billionaire Charoen Sirivadhanabhakdi’s TCC Holding would continue talks with Metro AG to find a way through the impasse.
TCC may yet take over the deal and fund the purchase in its own right.