PETALING JAYA: Thailand’s largest conglomerate, the Charoen Pokphand Group (CP Group), is buying a Malaysian premium supermarket operator for RM1.7bil – six years after it bought Tesco Plc and renamed it Lotus’s.
The group is using the same Thailand-listed arm, CP Axtra, that bought Tesco to acquire The Food Purveyor (TFP) from Malaysian-based private equity firm Navis Capital.
TFP operates premier supermarkets in urban Malaysia under the names Village Grocer, Ben’s Independent Grocer, BSC Fine Foods, Pasaraya OTK, and The Food Merchant.
The move underscores growing foreign control over Malaysia’s premium grocery retail space.
In 2021, Singapore-headquartered, Nasdaq-listed Grab Holdings Ltd bought the Jaya Grocer chain. Media reports valued the sale at between RM1.5bil and RM1.8bil.
Merger and acquisition consultant Nachiappan Arunachalam said foreign-owned supermarket chains typically have broader regional procurement capabilities, allowing them to source products from across their networks.
This, he said, could bring more regional brands to Malaysian shelves and potentially increase competition for local products.
“At the same time, greater consolidation among large retailers may reduce the number of major buyers ifn the market, which could put pressure on local distributors through tougher payment terms and procurement conditions, potentially driving consolidation among distributors,” he said.
However, some industry players downplayed the impact of increasing foreign ownership of supermarkets.
“Importing products to be placed on supermarket shelves doesn’t mean acceptance by local consumers. You already have retailers like Mixue bringing in foreign products. There is some acceptance, but also limitations due to issues such as halal concerns,” said the operator of a supermarket chain.
“The retail trade is ‘hyper-local’ in the sense that it serves customers here in Malaysia, who are different from those in the home country of the foreign owner.”
Another industry player said: “The RM1.7bil value represents a tiny percentage of the total supermarket industry value in Malaysia.”
In addition, there was a slight reversal of foreign ownership when Cold Storage, Giant and Mercato were sold to Malaysia’s Macrovalue, owned by Datuk Andrew Lim Tatt Keong and Datuk Gary Yap Keng Fatt, in 2023.
Macrovalue’s Lim told StarBiz that CP Group’s acquisition is good for the industry, as the deal will generate synergies and economies of scale, leading to better service and a wider variety of merchandise for customers.
“Malaysian supermarkets will each have their own role to play. Malaysia is a very big market with a growing population.
“Hence, there is space for everybody,” he said, adding that the development will not change Macrovalue’s expansion or positioning strategy.
“Our expansion and internal plans are quite independent of what is happening with other players in the market,” Lim said.
In a presentation deck, CP Axtra said it was drawn to TFP for its access to locations unattainable by Lotus’s hypermarkets, as well as the growth potential of Malaysia’s premium grocery market.
“Through this acquisition, we leapfrog entry barriers to prime, high-income locations in the city which have been secured by established players, gaining immediate access to key locations with strong customer traffic,” the company said.
Moreover, CP Axtra said it will leverage TFP’s landlord relationships for Lotus’s future expansion.
“TFP has established strong relationships with developers and landlords, providing Lotus’s valuable opportunities to leverage these networks to strengthen Lotus’s expansion plans,” it said.
According to the presentation deck, Malaysia’s hypermarket and supermarket segment was valued at RM27bil in 2024, of which premium supermarkets accounted for RM4.1bil.
The deck also stated that Malaysia’s premium grocery market is projected to post a compound annual growth rate of 8.3% from 2024 to 2030, with TFP the second-largest player in the segment.
It remains unclear what valuation was assigned to TFP in the deal.
In a filing with the Stock Exchange of Thailand, CP Axtra said the deal is expected to be completed in the fourth quarter of 2026 and will be funded via operating cash flow and external financing.
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The deal remains subject to the fulfilment of conditions precedent under the share sale and purchase agreement, as well as regulatory approvals.
CP Axtra said the valuation of buying TFP was based on the enterprise value-to-earnings before interest, taxes, depreciation, and amortisation comparisons with other retail peers in Malaysia.
Navis first invested in Village Grocer about 10 years ago and subsequently made several bolt-on acquisitions.
An industry player noted: “From Navis’ side it looks like a long-overdue exit. They have held the asset for more than 10 years. It is unclear if the sale will clear their typical hurdle rate, given the lengthy holding period.”
However, it should be noted that when Navis first acquired the supermarkets, the group had only six stores.
Today, it has grown to around 50 outlets, indicating significant value creation that should have been reflected in the sale price and returns for Navis.
As for CP Group, an industry player noted that Lotus’s is already a major player, and the deal provides instant entry into the premium grocery space.
“With CP Group behind them, they can probably leverage regional sourcing and supply chain scale to improve economies of scale quite quickly as Lotus’s and the wider CP Group certainly has a much larger scale that TFP can leverage on,” he said.
He added that it will be interesting to see what Lotus’s will do next with TFP and how much growth it can “squeeze out” of the business, considering it likely paid a high premium for the acquisition.
Rakuten Trade head of equity sales Vincent Lau said the deal has positive implications for the sector, as it signals continued investor interest.
“The deal is a good sign that foreign investors are still eager to look at Malaysia. This deal, coupled with the Jaya Grocer acquisition, is a good development for the sector.
“While the assets were not sold at peak valuations, neither were they sold at distress prices. Such deals show that strong local retail brands can attract regional buyers and generate meaningful exits for investors,” he told StarBiz.
Lau added that concerns over food security arising from foreign players controlling a growing share of Malaysia’s grocery retail market are exaggerated.
“You still have local chains like AEON, Mydin, 99 Speedmart, Eco-Shop and KK Mart. The main food staples that Malaysians consume are still largely distributed through local channels,” he said.
