According to Bloomberg, Thailand’s largest retailer CP All Public Company Limited (SET: CPALL) is rumored to potentially participate in a consortium set to acquire management control of Seven & i.
To support the financing of the consortium, Citi and Bank of America have been enlisted. It is speculated that CPALL might secure an equity stake in the management buyout valued at around JPY500 billion (approximately THB110 billion).
Analysis suggests that if CPALL were to solely fund the buyout with debt, its gearing ratio would rise from 0.8x to 1.15x, remaining below the permissible debt covenant level of 2.0x. While the total value of the management buyout remains undetermined, reports citing a figure of JPY9 trillion suggest that CPALL’s potential holding could amount to 5.6%.
In a hypothetical scenario where CPALL incurs debt expenses at a 4% rate, it could potentially result in a 3.7% decline in CY25 forecasted earnings attributable to the Seven & I investment. This development is anticipated to exert downward pressure on CPALL’s shares, although a stable earnings trajectory is expected in the upcoming periods.
