THE CARREFOUR TAKEOVER THE WINNER TAKES IT ALL

One of the sustainers of Indonesia’s econom­ic growth was high domestic consumption especially in the consumer retail sector, consisting of two sub­sectors consumer goods and food & beverages. This was probably the underlying reason for takeover of PT Carrefour Indonesia by an Indonesian national conglomerate Chairul Tanjung (CT).

As disclosed in the press, armed with loan worth USD 750 million, CT had bought off 100% shares of PT Carrefour Indonesia. This meant that holding CT Corp would command over all shares of this French retail company. This group of companies took the remaining 60% shares DI PT Carrefour Indo­nesia.

Furthermore through a company called Trans Retail Indonesia, CT Corp. obtained loan from 10 international banks for buying shares of Rp 7.2 tril­lion. The banks were Credit Suisse, BNP Paribas, JP Morgan Securities, ING Bank, ANZ, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland, Standard Chartered Bank and Bank of Tokyo. The credit facilities were based on tenure of three years with 5% interest. In other words it was a foreign company bought by a son of Indonesia with foreign fund.

PT Trans Retail Indonesia was given five years of right to use the name of Carrefour. In the future they would use a double brand i.e. Trans Carrefour. As owner, CT was expecting Trans Carrefour would perform better so they could increase sates.

Furthermore foreign personnel who were working for PT Carrefour Indonesia would be main­tained for six months or so. Furthermore the Man­agement would determine the faith of these foreign workers. Previously Trans Retail Indonesia had bought 40% of PT Carrefour shares since two years ago, to be exact April 2010.

Data of Citicorp showed that today PT Car­refour Indonesia commanded over 40% of the retail market of the hypermarket and supermarket segment with an operational network consisting of 85 outlets or supershops in 28 cities in Indonesia; the number of employees was 28,000 people The Company was engaged in relationship with 4,000 suppliers, of which 70% were small business (UKM). The Com­pany served more than 72 million customers in all of Indonesia, while sales was posted at more than USD 1.3 billion in 2011.

So takeover of Carrefour shares was ex-pecked to propel Carrefour growth each year at even greater percentage, i.e. 30% on the average this was thanks to the consumers’ sector in Indonesia which was constantly growing. Previously in the past 3 years growth was not so satisfactory, i.e. Less than 10%.

One thing was sure the transaction was the biggest acquisition transaction ever by an Indone­sian company. Also the CT step also strengthened Carrefour’s determination to become first preference of Indonesian consumers. This was a positive sign because they would be giving positive contribution to Indonesia’s economy through long term commitment.

According to the Indonesian Retail Association (Aprindo) the retail market was still developing amidst growing economy. Aprindo predicted that redial turnover in Indonesia this year would grow by around 10% - 20%. Opportunity for expansion was still open wide as consumers purchasing power increased.

About Carrefour’s plan to enter the capital market, players of the stockmarket were highly expectant of Carrefour’s plan to enter the stockmarket. However it was important to determine the right pricing and timing. To the players of the stockmarket, the retail industry in Indonesia was highly prospec­tive. That was thanks to people’s consumption pat­tern and per capita income which constantly grew. If national economy turned better, the retail industry would grow accordingly. The Government believed that the domestic market was strong enough to cope with the implications of slowing down global market.

Because of the good prospect, growth of the domestic market must be safeguarded whereby to serve as rescuer in case of export downturn. Ad­mittedly the global crisis had its effect on Indonesia especially in terms of commodity export.

In addition to that, the emerging new middle class in Indonesia was believed to propel economy further. Indonesia had stronger economic resilience compared to other nations due to domestic consump­tion dominated by the middle class.

Today the middle class in Indonesia numbered around 45 million and by 2030 it would increase to 95 - 100 million people. High consumption by this market segment would serve as strong economic power for Indonesia.

From the above picture one noteworthy thing was commitment of financing by foreign banks for Carrefour takeover. This indicated that foreign banks were optimistic that this takeover would soon be fruitful. The CT figure as owner of Carrefour was seen as a person of high integrity, strong and credible in the eyes of domestic and overseas entrepreneurs. Those were the assets that served as guarantee to foreign banks who were willing to finance acquisition of Carrefour by CT in Indonesia.

Business News - November 28, 2012