You are here
BRUSSELS - Belgian grocer Delhaize Group said Wednesday that it was considering selling its Singapore operations after receiving an offer for the 36 Shop N Save stores.
"We are considering the offer to see whether it is an opportunity for shareholders," said Delhaize spokesman Geoffroy d'Oultremont.
Delhaize is active in three Asian countries, Thailand, Indonesia, and Singapore. It owns a 49 percent stake in Shop N Save, which it bought for 12 million euros in 1999. The remaining 51 percent is owned by Singapore-based food company QAF Ltd., which also has received the same offer for its stake.
Delhaize's Asia unit reported an 3 million-euro operating loss in the first six months of 2003, compared with a 2.1 million-euro loss in the year-earlier period. Sales also dropped slightly on the year to 106.7 million euros from 107 million euros.
While the grocer insists that it intends to keep a presence in Thailand and Indonesia, the region is marginal in its strategy. Asian sales represent only 1.2 percent of group revenue, and analysts say Delhaize would have to invest heavily to build a significant position in Asia.
In its major U.S. market, Delhaize has so far managed to fight off intense competition from giants such Wal-Mart Stores, Inc. At home, it's battling against Carrefour SA. "Delhaize needs to defend its position in the U.S. and focus on debt reduction, and Asia isn't a priority for Delhaize," said Pascale Weber, analyst at KBC Securities in Brussels.
A sale of the Singapore operations could also help Delhaize reduce its towering debt. The grocer is saddled with 3.4 billion euros in debt, with a net debt to equity ratio of 98.2 percent.