TRIS Rating has placed the company rating and the senior unsecured debenture rating of Berli Jucker PLC (BJC) on CreditAlert with “developing” implication. The rating action follows the announcement by BJC on 12 February 2016 that it plans to acquire 483 million shares or 58.56% interest in Big C Supercenter PLC (BIGC) from Geant International BV (Geant). The purchase price is Bt252.88 per share, amounting Bt122.2 billion. At the same time, BJC will acquire 2.7 million shares, or 60% of C-Distribution Asia Pte Ltd.’s (C-Distribution Asia) shares, costing Bt856 million. The transactions will be completed within 31 March 2016, subject to the approval by BJC’s shareholders at an Extraordinary General Meeting scheduled on 21 March 2016. After the transactions, BJC will then be required to make a tender offer to purchase all the remaining shares of BIGC held by other shareholders.
BIGC is a leading retailer of consumer goods and products in Thailand. Its operation started in 1975, and the company was listed on the Stock Exchange of Thailand (SET) in 1992. For the year ended 2015, BIGC generated sales of about Bt129 billion and reported earnings before interest, tax, depreciation, and amortization (EBITDA) of almost Bt13 billion.
The acquisition of BIGC is in line with BJC's strategy to become a leading regional wholesaler and retailer covering the entire value chain. The expected benefits of the acquisition include access to the large format retail business and supply chain infrastructure. The transaction will enhance BJC's strengths and competitive position once BJC completes and succeeds in the post-merger integration of BIGC. The company will procure bridging loan of not exceeding Bt220 billion for the transaction. BJC may consider the capital increase in the proportion deemed appropriate.
Despite the benefits over the longer term, BJC's financial profile could be impacted, depending on the capital structure used to fund the acquisitions However, the capital structure, as well as the deleveraging plan, has not yet been finalized.
TRIS Rating will resolve the CreditAlert of BJC after the transaction is completed and the financial arrangement is made. The final rating action will take into consideration BJC's business and financial profiles post-acquisition.
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