Thai tycoon launches $6.6 billion buyout to kick off Asian retail push

Dhanin Chearavanont, chairman of Thailand’s largest agribusiness group, Charoen Pokphand Food, arrives at a Thailand-China Business Council Seminar in Bangkok March 15, 2013. Picture taken March 15, 2013.

Credit: Reuters/Chaiwat Subprasom

By Khettiya Jittapong

BANGKOK | Tue Apr 23, 2013 1:11am EDT

BANGKOK (Reuters) – Thailand’s richest man has made a $ 6.6 billion offer to buy cash-and-carry wholesaler Siam Makro Pcl MAKR.BK, the biggest Asia-Pacific M&A deal announced this year, as the tycoon looks to grab a larger share of the country’s buoyant retail market.

The country’s biggest convenience store chain CP All Pcl CPALL.BK, controlled by Dhanin Chearavanont, is gunning to push deeper into Thailand’s $ 80 billion retail sector just two months after Dhanin’s surprise move to buy a $ 9.4 billion stake in Ping An Insurance Group of China from HSBC plc HSAB.L.

Other companies that earlier showed interest in Siam Makro included Berli Jucker Pcl BJC.BK, a trading firm controlled by beer tycoon Charoen Sirivadhanabhakdi and Central Group, Thai media reports previously said.

“CP All is the only bidder to offer the price. It seems like the deal was done before other bidders joined the bid,” said a source with direct knowledge of the offer, speaking on condition of anonymity as the deal was confidential.

CP All’s offer represents a 15.4 percent premium to Siam Makro’s last traded price on Friday, before its shares were halted on Monday pending an announcement.

CP All’s $ 6.6 billion offer for Siam Makro would be the biggest retail M&A in the world this year, and double the size of No. 2 deal, according to Thomson Reuters data.

CP All, one of host of Thai companies sitting on vast cash piles and able to borrow money cheaply, will fund the majority of the acquisition with debt and does not plan to issue new shares, the company said. Dhanin’s Ping An stake buy was part-funded with a $ 5 billion plus loan from UBS (UBSN.VX), Reuters previously reported.

CP All said the deal would allow the combined firm to use the Makro brand and its properties, and to exercise greater power negotiating prices with suppliers and distributors.

Siam Makro, controlled by privately held Dutch trading house SHV Holdings, has 58 Makro-branded outlets in Thailand, mainly selling food in bulk to hotels, restaurants and smaller retail outlets. It made a 2012 net profit of 3.56 billion baht, up 36 percent year on year, but it has been the country’s slowest-expanding retailer as a result of stricter rules on large-sized stores.

RISING COMPETITION

Competition for Thai shoppers’ business has intensified since the Chirathiwat family, which owns the country’s largest retailer Central Group, bought a stake in the local unit of Japanese-based Family Mart (8028.T) last year.

Lawson Inc (2651.T), Japan’s second-largest convenience store chain, has also formed a joint venture with Saha Pattanapibul Pcl SPC.BK, part of the Saha Group, Thailand’s leading maker and distributor of consumer products.

Siam Makro has a market value of $ 5.7 billion. An offer at or near that price would be the largest domestic acquisition in Thailand’s retail sector.

Thai companies have stuck a string of deals recently, helped by cheap bank debt and surging share prices. That took Thai M&A volume to a record $ 25.9 billion last year.

CP All holds more cash than all but one Southeast Asian retailer, according to Thomson Reuters data, with $ 1.15 billion in cash and equivalents, just behind SM Investments (SM.PS) with $ 1.8 billion. The world’s third-largest operator of 7-Eleven stores, CP All aims to have 10,000 7-Eleven stores in Thailand by 2018.

The joint lead arrangers for financing of the deal for CP All are HSBC (HSBA.L), Siam Commercial, UBS (UBSN.VX), Standard Chartered (STAN.L) and Japan’s Sumitomo Mitsui, said two sources with direct knowledge of the matter.

Earlier on Tuesday CP All asked for its shares to be suspending pending an announcement. CP All said its board had approved an acquisition that may have an impact on its share price.

Its shares dropped nearly 6 percent on Monday amid expectations it would buy a stake in Siam Makro, raising concern about the need to raise funds.

($ 1 = 28.6850 Thai baht)

(Addition reporting by Elzio Barreto in HONG KONG, Saranya Suksomkij in BANGKOK, Saeed Azhar in SINGAPORE and Prakash Chakravati at Basis Point; Writing by Denny Thomas; Editing by Alan Raybould and Daniel Magnowski)

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Reuters: Business News

Thai tycoon launches $6.6 billion buyout to kick off Asian retail push

EXCLUSIVE-Two buyout groups ready BMC Software final bids -sources

Thu Apr 11, 2013 3:35pm EDT

(Adds private equity background, details from sources)

By Nadia Damouni

NEW YORK, April 11 (Reuters) – Business technology maker BMC Software Inc is expected to receive final takeover bids on April 22, with potential buyers pared down to two private equity groups, four people close to the matter said on Thursday.

Shares of BMC rose 1.7 percent to $ 45.50 on Nasdaq, valuing the Houston, Texas-based company at about $ 6.5 billion.

Buyout firm Thoma Bravo has joined a bidding group led by KKR & Co LP and TPG Capital LP, while Bain Capital LLC and Golden Gate Capital remain teamed up for the auction, the people added.

The private equity firms are finalizing financing for their respective bids, said the sources, who asked not to be named because the talks are private.

BMC could receive final bids ranging from the mid- to upper $ 40s per share, one of the sources said.

Buoyant debt markets have encouraged private equity to consider larger deals which in turn call for larger equity checks and make buyout firms more open to teaming up.

In the most striking example this year, Blackstone Group LP , KKR, Carlyle Group LP and Singapore’s state investor Temasek Holdings joined forces to submit an $ 11.1 billion offer for genetic testing equipment maker Life Technologies Corp, people familiar with the matter told Reuters this week.

The private equity firms looking at BMC are coming up against a couple of challenges, including a recent rally in its stock as well as options around the company’s two different businesses: mainframe and enterprise service management businesses, one of the sources said.

BMC, which competes with Oracle Corp, SAP AG , CA Inc and Compuware Corp, was under pressure from Paul Singer’s activist hedge fund Elliott Management to sell itself last year.

Elliott Management, which owns a 9.6 percent stake in BMC, had signed a standstill agreement with BMC last summer that ended on April 6. The New York-based hedge fund now has the ability to bid for BMC or nominate directors to its board.

KKR, TPG, Golden Gate, Bain, Thoma Bravo and Elliott declined to comment. BMC did not respond to requests for comment.

(Reporting by Nadia Damouni; additional reporting by Soyoung Kim and Greg Roumeliotis; Editing by Gerald E. McCormick and Richard Chang)

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Reuters: Financial Services and Real Estate

EXCLUSIVE-Two buyout groups ready BMC Software final bids -sources

Exclusive: Princeling-backed firm eyes $500 million China buyout fund - sources

By Stephen Aldred

HONG KONG | Mon Apr 8, 2013 11:29pm EDT

HONG KONG (Reuters) – Nepoch Capital, a new private equity firm founded by the son of a former member of China’s politburo, has launched the first ‘princeling’ fundraising since the new government took power last month vowing to clamp down on cronyism and nepotism.

China’s so-called princelings, the sons and daughters of the country’s elite, have a long association with private equity funds, and their investments – and sometimes bumper profits from a swift exit from lucrative initial public offerings – have drawn accusations of favoritism and corruption.

The view that princelings have the inside track on investments through their families’ political connections is often what attracts investors, industry executives say.

He Jintao, the son of He Guoqiang, who used to be in charge of Communist Party discipline, has quickly raised $ 200 million from investors despite a tough fundraising climate, and is expected to reach a target of as much as $ 500 million by the mid-year, two people with knowledge of the plans told Reuters.

The success of He’s fundraising may put Beijing in an awkward position, so soon after Xi Jinping took over as China’s new president pledging to tackle widespread corruption within government. The behavior and wealth of the nation’s princelings came to symbolize that corruption.

Four of the best-known funds with a history of high-level princeling involvement have raised a combined $ 10.4 billion for investments, according to Thomson Reuters and Preqin data.

Their ranks include Liu Lefei, CEO of CITIC Private Equity Funds Management and the son of politburo standing committee member Liu Yunshan; Winston Wen, co-founder of New Horizon Capital and the son of former premier Wen Jiabao; and Jiang Mianheng, a board member at New Margin Venture Capital in the 1990s and son of former China President Jiang Zemin.

INSIDE TRACK

Despite Xi’s drive for more austere government and a clean-up of official excesses such as lavish banquets that fuelled social resentment, the Nepoch launch shows that princelings are still pursuing business interests, attracting investors through their political ties.

“It’s getting harder to make money in Asia, and you need someone with an inside track,” said one investor in China private equity funds, explaining the strong interest in Nepoch.

Skeptics question whether it’s realistic to expect the government to root out endemic Communist Party favors. They see princelings remaining active, though maybe less in plain view.

“They will eventually find some way to find more distant relatives or find more subtle ways to control these economic resources,” said Ho-fung Hung, associate professor of sociology at Johns Hopkins University and author of “China and the Transformation of Global Capitalism”.

Hung believes the opaque nature of private equity makes it more of a safe haven for princelings. “If you say Wen Jiabao’s family has connections to the gem and diamond industry, people immediately understand what that is and how it makes money,” he told Reuters in a telephone interview. “Most people don’t understand how private equity works. That’s why it’s under the radar and people’s reaction won’t be that strong.”

Even if Nepoch’s founder operates entirely outside his father’s circle, the connection between the fund and He Guoqiang’s former position as head of China’s Central Commission for Discipline Inspection – responsible for stamping out corruption among government officials – is unavoidable.

“In this market, everyone is looking for distinguishing factors. You could say this distinguishes the fund,” said the private equity fund investor.

RESTRICTED INVESTMENT

Investors in private equity funds usually meet the fund’s founders to discuss investment strategies before they commit money. At Nepoch, investors only get to meet He Jintao after they have agreed to invest, said one of the people familiar with the matter.

Nepoch has already made two investments, including one in the technology, media and telecommunications sector, which is a restricted area for foreign investors, said the people with knowledge of the plans. They declined to name the investments.

Duncan Zheng, a former principal at European buyout firm Triton Partners, is a co-founder with He, the people said, declining to be identified as they are not authorized to talk to the media.

Nepoch, He and Zheng did not respond to phone calls and messages seeking comment for this article.

Returns from China private equity have proved disappointing, and fundraising more than halved last year to $ 23.4 billion, according to Asia Venture Capital Journal data.

(This story is corrected with spelling of Xi Jinping in para 5)

(Additional reporting by Megan Zhao; Editing by Michael Flaherty and Ian Geoghegan)

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Reuters: Business News

Exclusive: Princeling-backed firm eyes $500 million China buyout fund - sources

Dell buyout intrigue heightens as deadline looms

SAN FRANCISCO (AP) — Michael Dell is about to find out if other bidders think his company is worth more than he does.
Business Headlines

Dell buyout intrigue heightens as deadline looms

SEC sues over Heinz option trading before buyout

The Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011.

Credit: Reuters/Jonathan Ernst

By Ben Berkowitz

Fri Feb 15, 2013 8:52pm EST

(Reuters) – Securities regulators filed suit on Friday against unknown traders in the options of ketchup maker H.J. Heinz Co, alleging they traded on inside information before the company announced a deal to be acquired for $ 23 billion by Warren Buffett’s Berkshire Hathaway Inc and Brazil’s 3G Capital.

The suit marks the second time in six months that the SEC has taken legal action for alleged insider trading on a 3G deal.

The suit, in federal court in Manhattan, cites “highly suspicious trading” in Heinz call options just prior to the February 14 announcement of the deal. The regulator has frequently in past filed suit against unnamed individuals where it has evidence of wrongdoing, but is still trying to uncover the identities of those involved.

That trading, the suit said, caused the price of the particular call option they bought to soar 1,700 percent and generated unrealized profits of more than $ 1.7 million.

The regulator claims the traders are either in, or trading through accounts in, Zurich, Switzerland. The account had no history of trading in Heinz over the last six or so months.

It has also obtained an emergency order to freeze assets in the Swiss account linked to the trading. In the suit, the SEC refers to the account as the “GS Account” and in a statement Goldman Sachs Group Inc said it was cooperating with the regulator’s investigation.

“Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information,” Daniel Hawke, chief of the SEC’s Division of Enforcement’s Market Abuse Unit said in a statement.

Representatives of Heinz and Berkshire Hathaway were unavailable for immediate comment. A 3G representative declined to comment. The founder of 3G, Jorge Paulo Lemann, is from Brazil, but has made a home in Switzerland since the 1990s. He has not been implicated in any wrongdoing related to the deal.

After the deal was revealed on Thursday, options market experts called Wednesday’s trading “suspicious and incredibly well-timed.”

The suit marks the second time in less than six months that the SEC has taken action over a 3G acquisition. In September 2012, the regulator got a court order to freeze the assets of a Wells Fargo & Co stockbroker who allegedly traded on inside information about 3G’s 2010 acquisition of Burger King.

In that case, the SEC said the Brazilian stockbroker got the information from a client who had invested at least $ 50 million in one of 3G’s funds.

The suit also marks the second time in two years that controversy has erupted over a Berkshire acquisition target.

In March 2011, Berkshire struck a deal to buy chemical company Lubrizol for $ 9 billion. Less than three weeks later, Berkshire said Buffett lieutenant David Sokol was resigning and disclosed he had been buying Lubrizol shares while pushing Buffett to acquire the company. The SEC dropped a probe into Sokol’s trading earlier this year.

The suit is Securities and Exchange Commission v. Certain Unknown Traders in the Securities of H.J. Heinz Co, U.S. District Court, Southern District of New York, No. 13-1080.

(Reporting by Jonathan Stempel and Bernard Vaughan.; Writing by Ben Berkowitz.; Editing by Andre Grenon, Mary Milliken, Gary Hill)

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Reuters: Business News

SEC sues over Heinz option trading before buyout