Aeon buying Carrefour Malaysia: If it's real it's positive

Read about Aeon is closing in on Carrefour's Malaysian operations. A quick check - Carrefour is the third largest hypermarket operator in Malaysia with 26 outlets as at 2011. Although Carrefour has some of the best locations in Malaysia, I feel that Carrefour is not as strong an operator as compared to Aeon. I do not think Carrefour manages its hypermart well with the impending tough competition especially from Tesco.

By buying Carrefour's operations, Aeon will immediately double its number of outlets although I have doubts that it will continue operating as a hypermart as I feel that Aeon is better off positioning itself as a supermart. Some of the locations may just be overlapping like the one in Mid Valley. Nevertheless, it is a very good way to increase its reach despite the purchase price being a factor as well.

Although I do not know how many of the outlets Carrefour owns its premises outright, for an immediate expansion the price tag of USD250 million may not seem expensive for Aeon. I am sure Aeon will need to spend quite a bit for renovation as some of Carrefour's outlets seem old and need refurbishing. Aeon's balance sheet nevertheless will be able to absorb that without even having the need for a cash call from shareholders.

I like this deal if it's real. Based on Carrefour's Annual Report, revenue from its Malaysian operations totalled RM1.6 billion last year.

As for the total sales area, Carrefour Malaysia has 173,000 sq mtrs of retail space.