Negotiation between Central Group and Casino Group in buying Big C Vietnam

 
 
 
 

NEGOTIATION
  
Topic: Negotiation between Central Group and Casino Group in
buying Big C Vietnam

 
 
   

 

Hanoi, June  2021.


TABLE OF CONTENTS
1. CASE

1

2. BACKGROUND INFORMATION
2.1. Needs
2.2. Positions

1
1
2

3. TYPES OF NEGOTIATION

2

4. GOALS
4.1. Casino Group
4.2. Central Group

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4
5

5. DUAL CONCERN MODEL

5

6. COMMONALITIES AND DIFFERENCES
6.1. Commonalities
6.2. Differences

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7
7

7. BATNA
7.1. Casino Group
7.2. Central Group

8

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8. ADVANTAGES AND DISADVANTAGES

8

9. NEGOTIATION POINTS
9.1. Casino Group
9.2. Central Group

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9
10

10. STRATEGY
10.1. Casino Group
10.2. Central Group

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10
11

11. RESULTS

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REFERENCES

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1
1. CASE
The Central Group of Companies or Central Holding, founded in 1947, is a familyowned conglomerate holding company in Thailand involved in merchandising, real estate,
retailing, hospitality, and restaurants. Among its subsidiaries are Central Pattana and the
Central Retail Corporation. Its current CEO is Tos Chirathivat, grandson of the company
founder. Its chief rival is The Mall Group, which owns Siam Paragon and The Emporium,
and several suburban shopping centers.
Casino Group or Casino Guichard-Perrachon is a French mass-market retail group.
Retailing involves distributing safe, high-quality products, but it also means welcoming,
connecting, serving, bringing together, and even reassuring people. Since 1898, Casino
Group has developed and enhanced its banners in France and Latin America to satisfy all
consumer expectations. Casino Group operates across all food and non-food formats:
hypermarkets, supermarkets, convenience stores, discount stores, and wholesale stores.
Casino Group, currently managed by Jean-Charles Naouri, is quoted on the Paris Stock
Exchange, with the Rallye company as a majority shareholder. In 2017, its total revenue was
€37.8 billion.
Groupe Casino has sold Big C Vietnam to Thailand’s Central Group in a deal valued
at €1 billion ($1.14 billion), marking a further step in the French grocer’s plans to cut its debt.
Casino launched an ambitious debt-reduction program late last year, which included selling
Big C Vietnam and its Thai retail assets and some real estate holdings in Latin America. The
latest sale will take the deleveraging plan to €4.2 billion, Casino said.

2. BACKGROUND INFORMATION
2.1. Needs
Needs are the goals pursued by an individual or a group in order to survive. In this
business transaction, Big C to Central Group is a special thing because this retail chain has
been the "biological child" of the group since 1993. During the economic crisis in 1997,
Central had to sell Big C to Casino Group. But the desire to regain the "abandoned child" in

the past is the primary motivation for the Central Group to express its determination in this
deal. Besides, Casino Group decided to exit the Asian market completely because the total
Asian sales of Casino Group were only about $3.5 billion, ranking the lowest among its
demands.


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2.2. Positions
Central Group, which was established in 1927, is known as a famous family group in
Thailand operating in many fields related to real estate, retail, hotels, and restaurants.
Starting his business from a small grocery magazine on the west bank of the Chao Phraya
River, founder Tiang Chirathivat gradually developed the Central Group into a corrosive diet.
In addition to being one of the five largest business groups in Thailand, Central Group is also
known as one of the most labor-intensive training groups in the country of Chua Thap.
Casino Group (was established in 1898) is a French multinational corporation with the
main business of retailing and distributing goods through hypermarkets and supermarkets that
is ranked 15th in the world and holds a dominant position in the South American market (No.
1 in Brazil and Colombia) with sales reaching over $50 billion/year.

3. TYPES OF NEGOTIATION
Big C Vietnam has a network of 43 stores and 30 shopping centers and achieved net
sales in 2015 of €586 million ($666 million). According to the press release, Central Group,
in partnership with the Vietnamese Nguyen Kim Group, will continue the strategy of Big C
Vietnam in particular concerning the supply of goods produced in Vietnam for Big C stores.
Casino continues its procurement of Vietnamese food, which will be distributed in France,
Brazil, and Colombia. Big C Vietnam has built strong relationships with Vietnamese
suppliers and farmers, customers, employees, and local authorities and communities, which
allowed the development of modern retail in the country. Japan’s Aeon, Vietnam’s Masan,
South Korea’s the Lotte Group, Thailand’s Central Group, and Berli Jucker all competed to
buy Big C Vietnam.

In early 2016, Thai tycoons were pushing the speed of acquisition of Vietnam’s
wholesale and retail system. Two Thai groups owned by the second-richest billionaire of
Thailand and the Central Group have declared their wish to acquire the Big C system. Earlier,
Casino Group (France) mentioned the sale of the Big C supermarket chain in Vietnam.
Casino does not consider its key market. Casino currently owns 58.6% of Big C Supercenter
Thailand – the firm with a total capitalization of $5.5 billion. Casino wanted to sell the shares
in Thailand after saying to sell its stake in Vietnam in January. Casino launched an ambitious
debt-reduction program that included selling Big C Vietnam and its Thai retail assets and
some real estate holdings in Latin America.


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Central Group, which has interests spanning from hotels and resorts to property and
restaurants, also bid when Casino was selling its Thai assets, eventually losing out to Thai
tycoon Charoen Sirivadhanabhakdi. Mr. Chaoren bought French retailer’s majority 58.6%
stake in Big C Thailand for €3.1 billion. The latest deal adds to a flurry of M&A activity in
Vietnam, especially by Thai tycoons, who are looking at snapping up stakes in consumerfocused companies, aiming to profit from the country’s fast-growing middle class. The
acquisition of Big C’s Vietnam assets will boost Central Group’s footprint in that country. In
general, the main reason why Central Group targets Big C and not any other supermarket
system is that Big C Vietnam has built a good relationship not only between suppliers and
customers but also includes employees, local authorities, and local and international
communities. This makes it easier for them to grow and expand their network further. Central
Group is owned by Thailand’s third richest man Tos Chirathivat, who, according to Forbes,
has a net worth of $12.3 billion. According to Central Group’s website, the company had total
sales of $7.5 billion in 2013 and a store network of 4,400 branches.
From the perspective of the brand, Thai groups have made a pretty good move. In this
way, they can reduce funding to build a new brand from the beginning and save time, money,
and effort. To develop a new retail brand in a market with many big brands, the competition
will be very fierce. Getting a new business license in the retail sector is also complex and
difficult for foreign investors. The brands that Thai groups bought and want to own are huge

and have a long history. For example, Big C has been in VietNam since 1998. The brand has
distribution systems that stretch across the country, which have ecome very familiar to
Vietnamese consumers. Thai investors choose the shortest way to succeed; they are investing
large sums of money from the beginning. Not only Thais but many international investors do
it that way.
However, when these distribution channels (Big C is a telling example) belong to Thai
investors in general and Central Group in particular, it is a risk for Vietnamese businesses
because Thai products have good quality, competitive price, and have gained the confidence
of Vietnamese consumers. The near geographic distance and the open policies on tariffs of
the ASEAN Economic Community (AEC) will enable the flood of Thai products in Vietnam
in the coming years. Thais know how to take advantage of tax exemptions in AEC. Thai
goods firstly help consumers access quality products at affordable prices. At the same time,
they also create pressure on Vietnamese enterprises to reform and improve their
competitiveness.


4
The pressure of $ 4 billion in debt made Casino Group (France) not care about the
origin of the investor, but only needed to obtain the highest value. That goal makes the M&A
market in Vietnam witness an unprecedented value-for-money deal from "players" in the
distribution, retail, experts and media markets. However, after the price chase, at the last
minute, Central Group had "carried" Big C Vietnam for 920 million euros (equivalent to
$1.05 billion).
Looking at the strengths of Big C Vietnam, Casino's move is not a divestment in a
negative sense, but rather how they restructure their assets to operate more efficiently. The
growth potential of this retail chain in Vietnam is quite immense, so Casino aims to obtain the
highest value from the sale of Big C Vietnam. The fact that many domestic and foreign names
plunged into the "war" to acquire Big C Vietnam is completely understandable. Because if
they succeed, they can dominate the distribution and retail market and will outstrip their
competitors. Casino has created a fair deal for all parties, regardless of the origin of the

bidder. The winner of the auction depends entirely on commercial terms.
In conclusion, The deal between Central Group and Casino is win-win negotiation.

4. GOALS
Going into the negotiation means that both parties already had certain goals in mind
and by understanding them, the easier for agreement to emerge.
4.1. Casino Group
The direct goal we can see from Casino Group is selling Big C Vietnam as they
marketed the franchise to multiple companies to great success. After all, this is the main topic
that would be discussed in the negotiation. However, underneath it are indirect goals that the
company wants from the deal.
Because of the pressure of $ 4 billion in debt, Casino decided to sell assets, including
BigC Thailand and BigC Vietnam. Casino Group will not care about the origin of investors
because the goal in the deal is to sell at the highest price.
The company wants to concentrate on its core markets: Europe (France - 18.8 billion
euros) and Latin (22.6 billion euros), not to mention the newly developed e-commerce
segment but the results have been very positive when having the same revenue as the Asian
retail market.


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4.2. Central Group
On the other side, there is Central Group with the very clear goal of wanting to buy
Big C Vietnam after seeing the offer to sell from Casino Group. But also similar, Central
Group also had other goals in mind.
Big C is a special asset to Central Group due to the fact this retail chain has been owned by
the institution on account of 1993. During the financial disaster in 1997, Central had to sell
Big C to Casino Group. Deciding to regain Big C is the primary motivation for the Central
Group to show its dedication to this deal.
The main reason why Central Group targets Big C is that Big C Vietnam has built a

good relationship not only between suppliers and customers but also includes employees,
local authorities, and local and international communities. This makes it easier for them to
grow and expand their network further. Additionally, this is completely in the group's
strategic plan to expand the development network in the ASEAN region.
By this way, they can reduce funding to build a new brand from the beginning, and
save time, money and effort. To develop a new retail brand, in a market with many big
brands, the competition will be very fierce. Getting a new business license in the retail sector
is also complex and difficult for foreign investors.

5. DUAL CONCERN MODEL
The Dual Concern Model assumes that parties’ preferred method of handling conflict
is based on two underlying dimensions: assertiveness and empathy.

The assertiveness

dimension focuses on the degree to which one is concerned with satisfying one’s own needs
and interests. Conversely, the empathy (or cooperativeness) dimension focuses on the extent
to which one is concerned with satisfying the needs and interests of the other party.


6
In the Big C acquisition case, it belongs to the collaboration type which is highly
assertive and highly empathetic at the same time. Both the Central Group and Casino Group
are benefited in this case. They are concerned about the underlying relationship and are
sensitive to the other person’s needs while simultaneously being committed to having their
own needs met. They see conflict as a creative opportunity and do not mind investing the
time to dig deep and find a win-win solution. With the potential growth of Big C as well as
the Vietnamese market, Central Group has benefited from the opportunity of owning
Vietnam's leading retail chain and it is an important step in expanding in the ASEAN market.
From Casino Group’s perspective, they can gain a huge amount of money from selling these

assets to cut down a debt of $4 billion.
The strategy of Casino in this negotiation is that they are mostly based on the money
relationship during the bidding process. In the 1st round of the bidding process, lots of
companies inside and outside join in bidding with a really high price since BigC in Vietnam
is one of the biggest retailers in the market, and Central Group is also one of them. After
several rounds of bidding, BigC decides to agree with the price that Central Group offers and
officially sells BigC for Central group. Standing on the Central Group side, they have a
bigger purpose with the strategy to expand and strengthen their retail market in Vietnam since
back at that time, they had already had $600 million revenue with 6000 employees in their
Vietnamese branches (2015). Therefore, if they can own BigC, these numbers can grow
double. With all of the above, Big C and Central Group have gained a collaboration
relationship in this negotiation.

6. COMMONALITIES AND DIFFERENCES
Integrative negotiation is a negotiation strategy in which parties collaborate to find a
"win-win" solution to their dispute. This strategy focuses on developing mutually beneficial
agreements based on the interests of the disputants. Therefore, emphasizing the
commonalities and differences between the parties is a vital step to help a successful
negotiation. Carrying out analysis on commonalities and differences will help negotiators
understand the adversary's interests. Then negotiators will be better equipped to negotiate an
agreement that will be acceptable to both parties.


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6.1. Commonalities
Firstly, the two companies share the commonality in the line of business. Central Group
and Casino Group (the holding company of Big C Vietnam) are both large and long-standing
groups operating in the retail sector. Secondly, these enterprises are similar in positioning.
Central Group was established in 1927. It is currently operating in the fields of real estate,
retail, restaurants and hotels. The largest asset of the group is Central Retail - one of the

largest retail groups in Thailand, which owns some shopping centers such as Robinson,
Central and Zen. The Casino Group was established in 1898. This French retail group is
ranked 15th in the world and holds a dominant position in the South American market (No. 1
in Brazil and Colombia). Thirdly, both enterprises witnessed the similarity in the customer
size. The vision of all two corporations towards all types of customers, all ages and all levels
of society. Besides, Consumers' needs of Vietnamese people are similar to those of Thai
people due to being Asians. Lastly, organizational culture is the same in both companies.
Human resource development is an investment activity, not a cost activity for both
companies. The staff are professionally trained to improve their professional skills.
Additionally, national culture has a great influence on organizational culture. Vietnam and
Thailand are both Asian countries, so there are typical customs and habits of the Eastern
people. Hence, Big C Vietnam supermarket chain with most Vietnamese staff will have the
same lifestyle and working style as Thai people.
6.2. Differences
The primary thing that made the difference between two companies is the business
model. Central Group is a family - run business. Therefore, family members hold all key
positions including about 150 people in this family who are working at the corporation. On
the other hand, Casino Group is a type of public company. For Big C Vietnam, the General
Director directly manages the marketing department, the systems of its branch stores and
agents.

7. BATNA
7.1. Casino Group
This case puts Casino Group in a comfortable position as they hold an attractive
property that many want to buy. Aside from Central Group, there are also TCC, Aeon (Japan),


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Lotte (Korea) and Vingroup, Masan, Saigon Co.op and so many more. Therefore, all Casino
has to do is go for the one that offers the highest payment.

7.2. Central Group
In contrast, Central Group is in the weaker position, as there is really no alternative
that is as attractive as Big C Vietnam on sale. This means they need to do their best to get the
deal with Casino Group.

8. ADVANTAGES AND DISADVANTAGES
Vietnam is being evaluated as one of the most potential retail markets in Southeast
Asia with sales of about $110 billion last year. This is the fertile land that retailers around the
world want to occupy. Big C is the retailer with the best prices and the most promotions - this
is the inherent strength of BigC, even when changing owners, they always pursue this
strategy to compete with other brands. Furthermore, Big C Vietnam has built a good
relationship not only between suppliers and customers, but also with employees, local
authorities and the local and international community. This makes it easier for them to expand
its development network in the Asean region. When Central Group acquired Big C, they not
only bought back all fixed assets but also the value of intangible assets including domestic
brands and knowledge of the national business environment. This knowledge can reduce the
risk of not understanding the host country's culture. On the other hand, Casino Group could
focus on its main markets, which are Europe (France - 18.8 billion euros) and Latin ($22.6
billion), not to mention the newly developed e-commerce segment which has had very
positive results when it has sales equal to the whole Asian retail market. Moreover, the Big C
supermarket system currently operates 21 trade centers in major provinces and cities across
the country, employs 8,000 employees, and has experience in the business, selling 50,000
items, of which 95 % are produced in Vietnam. Every year, Big C contributes to promoting
about 1,000 containers of Vietnamese goods in Latin America, Europe, and the Indian Ocean
region. Every year Big C welcomes about 45 million shoppers. These are the reasons why the
attractive market has drawn many potential buyers (Aeon - Japan, Lotte Group - Korea, Berli
Jucker - Thailand), which helps the value of Big C to be pushed up with the highest price, and
is also disadvantageous for Central Group.

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9. NEGOTIATION POINTS
9.1. Casino Group
9.1.1. Walkaway point
The price beyond a negotiator won’t go . As a seller, this number is the lowest you can
go (discount) before the deal no longer makes sense.
Casino Group has made significant investments for more than 18 years in developing
its subsidiary Big C in Vietnam and to create a leading food retailer in Vietnam. Big C
Vietnam consists of a network of 43 stores and 30 shopping malls and in 2015 recorded
turnover excluding taxes of $665 million. The firm earlier expected to fetch some US$800
million from the sale. Therefore, Casino’s walkaway point was $800 million.
9.1.2. Target point
The point at which a negotiator would like to conclude negotiations is an optimal
goal. TCC Group's acquisition of BigC Thailand for $ 3.5 billion (EV / EBITDA 1.7 times),
so BigC Vietnam is expected to have a surplus because investors are willing to pay higher
prices because of more growth potential than Big C Thailand. The Chairman Advisor of
Casino Group Jacques Fourvel affirmed that Big C Vietnam can absolutely sell for 1.7 times
the revenue, even higher at 2 times of revenue. Thus, the target point of this corporation was
about $1.3 billion.
9.1.3. Asking price
Asking price is the point at which the buyer is not willing to pay as much as the seller
wants to sell for. Despite the pressure of $ 4 billion in debt, Casino has agreed to sell its stake
in Thailand’s Big C Supercenter to the country’s TCC Group for €3.1bn excluding debt in a
deal that will help the French retailer halve its net debt. Therefore, Casino Group needs at
least €1.9bn to pay the debt. The asking price of Casino Group was $1.5 billion (equivalent
to €1.9bn).
9.2. Central Group
9.2.1. Initial offer
In March 2016, the CEO of Central Group claimed that they had already had 58.56%
shares of BigC Thailand, and they didn’t have any intention to create a new retail chain to

compete with TCC Group (another big corp in retailing in Thailand). Instead of doing that,


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they want to invest their money in buying BigC Vietnam with the aim to expand their market
share in the Southeast market, and in Vietnam, this company has already had a significant
number of stores and staff working for them. With that aim, at first, they intended to buy
BigC with the price of $800 million - $1 billion. By starting with the lower end, Central
Group would first offer $800 million.
9.2.2. Target point
At the same period of time, in Thailand, Central Group has just finished the deal to
sell 25% shares of BigC Thailand to TCC Group, and this deal gave them $1.4 billion back.
After that, with this background, they decided to step into the bidding process to buy BigC
Vietnam with the target point: $1 billion.
9.2.3. Walkaway point
The walkaway point of Central Group is generally unclear since, in this case, Casino
didn’t take the background of the buyer into consideration; they just cared about the price that
other companies will pay for this deal. The final result is quite obvious that Central Group is
the party that offers the highest price which made them officially become the new owner of
BigC Vietnam. If we base on the capacities of Central Group after the deal with TCC about
BigC Thailand mentioned above, the walkaway point could be around $1.3 billion.

10. STRATEGY
With different and even opposing goals in mind, both companiesCompanies would
have strategies to influence the other and get the best deal.
10.1. Casino Group
The very first thing they can do is give out the price first. This would mean starting
with the $1.5 billion marks. By stating their price first, not only can they show the other party
their perspective, but also create a benchmark for all the negotiations that would follow later
on.

Another way they can push Central Group is by presenting the value of the franchise.
These would come in the form of annual reports and other documents, showing the success
and position of Big C Vietnam. If they want to push even further, talking about the potential


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of investing in the Vietnamese market is also good. By putting emphasis on the strength of
the franchise, the other party would not want the chance to slip and more likely to lower their
target.
However, arguably the most powerful one would be referencing other offers. As
mentioned, Casino Group is sitting in a good position as many want to get their hands in Big
C Vietnam, so all they need to do is accept the best offer. By referencing them, Central Group
would have little choice but to offer an even higher offer or not get the deal.

10.2. Central Group
Similarly, Central Group can also give out the price first for the same reasons above.
Showing perspective and creating a benchmark are crucial for successful negotiation.
Another thing Central Group can do is offer attractive payment methods. As
mentioned, the goal of Casino Group is to pay back their debts by selling Big C Vietnam.
With this in mind, Central Group can offer to pay with their shares, and considering they are
a relatively stable corporate, the shares are likely to increase in value in the future. That is a
good offer from Casino Group’s perspective while also allowing Central Group to lower the
price offer due to the future value the shares offer.

11. RESULTS
In the end, the two companies reached an agreement of $1.05 billion and got both
what they wanted within the settlement range. Casino successfully sold the franchise to the
best offer, while Central Group was able to fulfill their next step in the journey to expand
their business in the ASEAN market.

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đối tác Massan và đấu thầu thoái vốn. [online] BTCVALUE JSC. Available at:
< [Accessed 21 May 2021].
nhipcaudautu.vn. 2020. Gia tộc người Thái đứng sau Big C với bí quyết hịa thuận cùng
chung sống. [online] Available at: < [Accessed 25 May
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P.V, 2016. Central Group bán Big C Thái Lan 1,4 tỷ USD, mua Big C Việt Nam 1,1 tỷ USD.
[online] Viettimes. Available at: < [Accessed 25 May 2021].
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< />[Accessed 27 May 2021].


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vtc.vn. 2019. Tỷ phú Thái thâu tóm Big C như thế nào ? [online] Available at:
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