Walmart Stores Inc, the world’s top retailer, has joined the race to buy Indonesian retailer Matahari’s hypermarket business, stirring up competition for the US$1 billion auction in Southeast Asia’s biggest economy.
U.S.-based Walmart is stepping up international growth—currently bidding on South Africa’s Massmart—especially in the wake of more than a year of declining domestic same-store sales at its namesake stores.
Sources told Reuters Thursday that Walmart has hired Barclays Capital to advise it on the transaction. The mandate is a coup for Barclays, which is building up its investment banking business.
Matahari is selling Hypermart, Indonesia’s second-biggest hypermart chain after PT Carrefour Indonesia, to focus on its core healthcare and property assets.
One banker said he expects the deal to fetch between $800 million to $1 billion.
Walmart is expected to compete in the auction with South Korea’s Lotte Shopping and private equity fund Carlyle Group.
The auction provides an opportunity to buyout funds and global and regional retailers to get a foothold in Indonesia, where consumer spending is expected to rise alone with strong economic growth.
Matahari shares are up about 70 per cent in 2010, reflecting some of those growth expectations, far outpacing a 42 per cent rise in benchmark Jakarta stock index.
It was unclear whether Walmart had submitted a formal offer.
Sources previously told Reuters that Lotte and Carlyle had submitted first-round bids. Source were not allowed to speak on the record because details of the auction remain private.
A Walmart spokesman said the company does not comment on rumors or speculation. Barclays Capital declined to comment.
Bank of America, which is advising Matahari on the deal, was not available for comment.
A strong line-up for Matahari’s auction comes ahead of Friday’s deadline set by French retailer Carrefour for the planned sale of its Southeast Asian assets in a $1 billion deal.
Japan’s biggest retailer Aeon Ltd and private equity group Navis Capital are likely to submit second-round bids for the Carrefour assets, sources previously told Reuters.
Walmart’s international sales account for about a quarter of the company’s overall sales. In June, Chief Executive Mike Duke told international employees that “the first expectation for Walmart International is really about growth.”
Walmart has also been bidding for South African discount retailer Massmart, the country’s third-largest retailer that represents a platform for African expansion.
Last week, Massmart said Walmart might scale back its $4 billion takeover bid and instead buy a more than 50 percent stake, which would keep Massmart shares listed in Johannesburg.
But the offer has spurred questions about local resistance, and South Africa’s service industry union said Thursday that it would not rule out the possibility of a strike against Massmart were Wal-Mart to acquire a stake.
The country’s vocal labor unions have denounced Walmart as unfair to workers.
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