Delhaize to quit Singapore?
Singapore's Stop N Save chain after receiving an offer from an
unnamed bidder. Could this be Delhaize's solution to the problem of
reducing its massive debt burden?
Belgian retail group Delhaize has had a troubled year, with poor sales at its US operations in particular weighing heavily on its results.
The chain has been busy offloading a number of under-performing units in the US, particularly at the Food Lion banner, in a bid to focus on a smaller core of well-run stores.
The latest step in this refocusing programme could be the sale of its Singapore-based business, Stop N Save. According to press reports, the company is considering offloading its 49 per cent stake in the Asia business, which operates 36 stores, following an unsolicited offer.
Delhaize has released no details about who the bidder is, or how much had been offered for the stake, but there are any number of potentially interested parties, both from Europe and America or elsewhere in Asia, ranging from Tesco or Carrefour to Wal-Mart or Dairy Farm.
The Belgian company bought its minority stake in Stop N Save for €12 million in 1999. Its local partner, QAF, has also received a buyout offer for its 51 per cent stake, Delhaize said.
The Asian business has not been among the most successful for Delhaize, with sales of €53.8 million, down 0.3 per cent on the back of currency devaluations, and operating losses of €3.0 million in the first half of the year.
But the unit, which also comprises the wholly-owned Food Lion Thailand and Delhaize's 51 per cent stake in Super Indo in Indonesia, continued to perform well in local currency terms, Delhaize said.
Whatever the outcome in Singapore, the future of Delhaize's two other Asian operations are also in doubt. Asia currently accounts for just 1.2 per cent of its total group sales, and the company ultimately has more to gain by selling off its interests there than by investing heavily in order to build up the critical mass needed to compete with the major players.
The proceeds from any sale -and finding a buyer would not be hard - would help the Belgian group in its efforts to restructure its business, in particular by paying off its increasingly heavy debt burden.
