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PTT pressured to end Carrefour bid

Posted by arnon_k On September - 22 - 2010

Cabinet questions state enterprise role

PTT Plc may abandon its bid to purchase the assets of the Carrefour retail chain in Thailand in the face of pressure from cabinet members.

Ministers yesterday questioned whether it was appropriate for the majority state-owned oil company to bid against the private sector.

The issue arose after prime Minister Abhisit Vejjajiva asked Energy Ministry officials on Monday whether PTT had received approval from its board to pursue the Carrefour deal.

Vachara Kannikar, a deputy government spokesman, quoted Energy Minister Wannarat Channukul as telling the cabinet that PTT would scrap its bid because retailing was not a core business of the company.

Mr Abhisit said PTT executives should consider carefully whether to go ahead because its large capital and state enterprise status _ it is also the largest listed company on the Stock Exchange of Thailand _ gave it advantages over private companies.

“At a time when the economic structure is changing very fast, a state-owned enterprises should be very careful with any move as sometimes the investment may not be for the national interest but rather for the state enterprise itself,” said Mr Abhisit.

Also bidding for the French retailer’s 43-store network in Thailand, estimated to be worth 16-19 billion baht, are Central Group, the SET-listed trading group Berli Jucker (BJC), and the French retail chain Casino.

PTT executives declined to comment yesterday on the latest developments.

Mr Wannarat said that even though PTT had entered the second round of bidding for Carrefour, PTT’s board had yet to approve the bidding intention.

He said the board and not the Energy Ministry should have the final say on whether to proceed.

Another source quoted Finance Minister Korn Chatikavanij as saying that while PTT Plc was a listed company, it was still majority state-owned.

Since the 2007 Constitution prevents state enterprises from competing with private companies, PTT might be on shaky legal ground, Mr Korn said.

“Also, retail is not PTT’s core business and it also is not related to energy security. Thus PTT should not bid for Carrefour,” he said.

Mr Wannarat said PTT reasoned that it was interested in the retail business as a way to diversify risk away from heavy dependence on fuel.

Shares of PTT closed yesterday on the SET at 287 baht, up three baht, in trade worth 1.54 billion baht.

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