Concerns over finances and risk see shareholders oppose plans to acquire Metro in Vietnam.
Some 88.5 per cent of shareholders at an extraordinary shareholder meeting of Thailand’s Berli Jucker (BJC) voted not to buy the supermarket Metro in Vietnam, due to an additional condition being added to the purchase. TCC Holding, the largest shareholder, wasn't permitted to vote as it proposed the purchase.
The additional condition related to the payment for the purchase, stipulating that BJC had to deliver a $776-million guarantee to the seller, according to Thai media. A further $776 million will be required as evidence of payment if there is an amendment to the investment contract.
BJC would therefore have to pay over $1.5 billion to make the acquisition, creating a significant financial burden and a large degree of risk, according to an independent director of BJC. He explained that BJC would need to borrow up to $1.2 billion and its debt-to-equity ratio would increase 1.99 times.
An advisor to BJC said that the additional condition also had high legal risks, besides the financial burden. The advisor said that if shareholders, excluding TCC Holding, accepted the deal then BJC could continue to purchase Metro in Vietnam. TCC Holding must manage financial sources needed to fund the purchase.
The independent director revealed that TCC Holding was in negotiations with Metro AG in a bid to come up with a fairer deal.
The additional condition was added two months after BJC announced its intention to purchase Metro in Vietnam.
“We haven't received any official announcement from the parent company regarding the deal,” Metro Vietnam’s media representative said.
BJC hoped to acquire Metro Vietnam in order to penetrate into the Vietnamese market, sell Thai products and expand its network, given that Metro holds 22 per cent of Vietnam’s modern grocery market share.