The world's second largest retailer, France's Carrefour, is said to be exiting three Asian markets - Thailand, Malaysia and Singapore. Collectively, they are said to have a price tag of US$1 billion (RM3.2 billion).
A Carrefour spokesperson in Paris when contacted about the planned sale said: "We neither confirm nor deny it." Reuters reported that the auction is at its early stages.
But here in Malaysia, the story is slightly different.
Sources say the auction was out some weeks ago and bids for Carrefour's 23 hypermarkets have already been placed. Some say even local players have entered their bids.
Carrefour's business, including its assets, is worth at least RM1.5 billion, according to industry estimates.
It is safe to assume that Tesco and Dairy Farm, operator of the Giant chain of supermarket and hypermarket, are also bidding. The last time a foreign retailer was up for sale in 2006, which was Holland's Makro Cash and Carry Distribution, Tesco, Dairy Farm and Carrefour put in offers.
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The reason for this is Malaysia's tight control over hypermarket licences, making expansion difficult.
This year, no new licences are being issued and only old unused licences are being swapped for new locations.
So the best way to grow is to acquire. A good example is Dairy Farm which entered Malaysia via an acquisition and has, to date, bought seven retail chains.
Interestingly, sources say that Tesco and Giant may have bid for different stores to avoid duplication within the same area.
Carrefour owns most of the stand-alone stores and leases the ones within shopping complexes. This is one way in which both parties may split the "loot" so to speak.
There are four possible scenarios for Carrefour's exit.
Firstly, the two-way fight between just Tesco and Giant. If both are successful, they would have a bigger share of the pie and could cause jitters among the smaller local players.
As Datuk Ali Ameer Mydin, who runs a total of 55 stores and four hypermarkets said: "The country will lose out, as there will be (somewhat of a) monopoly in the market. Malaysia could become like Australia where Coles and Woolworths control 60 per cent of the market."
The second scenario is the possibility of a Malaysian company buying Carrefour's stores.
For this to happen, the local company has to have strong financial muscle in the likes of Malaysian Armed Forces Fund (LTAT), the Employees Provident Fund or even Tabung Haji. Knowledge of the retail industry is also crucial to compete against formidable players like Tesco and Giant.
Should the local player even outbid foreign rivals, they may end up paying too much and have to wait longer for returns.
But unlike licensing restriction on foreign hypermarket players, local operators can open stores easily and even source products from cheaper markets abroad.
This means that there may be no point taking over the Carrefour chain as any unused licence is precious to a foreign player, but not for a local company.
In the third scenario, we could see the emergence of a new foreign player. While the Ministry of Domestic Trade and Consumer Affairs says there is no new application now, the best way to enter a country is via acquisition.
Previous reports have said that US-based Walmart, Costco and Germany's Metro, at some point, were interested in Malaysia.
The fourth scenario, which would make even more local retailers and suppliers anxious, is the possibility of a swap. This has happened elsewhere before.
Tesco is considered to be generally stronger in Thailand, while Giant has a better footing in Malaysia and Singapore.
If either Tesco or Dairy Farm bid for all three countries - Thailand, Singapore and Malaysia - and win, they could swap and draw their territories. This may result in only Giant operating in Malaysia and Tesco in Thailand.
Creating a monopoly is surely a no-no, what with plans to introduce a Competition Law in Malaysia. In the UK, its law does not allow any one party to have more than 25 per cent of the market.
An interesting question is what will become of the Carrefour Express convenience store owned by Datuk Ibrahim Ahmad. He now pays a licence fee to use the Carrefour Express name.
The products available at its 15 outlets are also supplied by Carrefour. Will Carrefour Express even exist later or will there be a name change?
Whatever the scenario, the government will surely be monitoring closely as it weighs the need to protect local traders, modernise the distributive trade industry and attract foreign investments, all at the same time.
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