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In late April, Ahold announced the sale of its Indonesian operations to Dairy Farm subsidiary PT Hero for EUR12 million (USD13 million). This marks the expected exit of Ahold from the country. The deal involves 22 existing supermarkets under the Tops banner, one under construction and two distribution centres. The sale is subject to approval by Hero shareholders and is expected to be finalised in the third quarter.

Following the departure from Indonesia, Ahold also announced its departure from the Malaysian market in the first week of May. The Tops supermarket network in Malaysia will also be sold to Hong Kong-based Dairy Farm, so marking its exit from the Malaysian market. The divestment to Dairy Farm had been rumoured for some time. The Malaysian transaction is also expected to be completed in the third quarter of the year. The deal involves 34 outlets under the Tops banner and a distribution centre with the network generating turnover of EUR85 million (USD91 million) last year. The sale price has not been disclosed.

Ahold‚s flight from the Southeast Asian region was more than expected following the financial scandal that spoiled the company's reputation in late February this year, and made divestment of non-core assets a matter of life and death. Given the small sizes of the store networks in Indonesia and Malaysia, the sale of the operations was not so hurtful to turnover, but further diminished the reputation of Ahold as an international retailer.

Speculation as to who would scoop up the well run Tops supermarket operations in both countries centred around other internationals in the region, especially Tesco and Carrefour. In this contest however, Dairy Farm seems to have made the deal without too much prior speculation. In fact, Dairy Farm has been focusing on developing its businesses in Asia since selling its retail operations in New Zealand in 2002 and Australia in 2001.

These disposals made significant funds available to the group, and over the past year Dairy Farm has made no secret of the fact that it was looking for sizeable acquisitions in Asia in order to enhance its existing operations. However, the group also stated that it is cautious and was patient enough to wait until the right deal came along. Clearly the group felt that the right time has now arrived.

The proposed deals will cement Dairy Farm's market leadership in Malaysia while boosting its position in Indonesia. In Malaysia, the acquired 34 Tops supermarkets will be rebranded to the Giant and Cold Storage formats, taking the total number of Dairy Farm supermarkets in the country to 47. Six of the stores to be acquired are in East Malaysia and the deal will allow Dairy Farm to extend its presence outside the Klang Valley, an important part of the group‚s long-term strategy. In Indonesia, the deal involves 22 existing supermarkets under the Tops banner, one under construction and two distribution centres. The deal will allow Dairy Farm to close the gap on its major competitors in the market, such as Matahari and Ramayana.

Now only Ahold's sizeable Thai operations remain up for sale in the region. In the Thai market, competition is becoming fiercer and consolidation is increasing. Tesco is currently market leader and with the acquisition of Ahold‚s stores in the country, could make a further leap ahead of the rest.
However, with Dairy Farm already having wrapped up two deals and with a clear intention to increase its presence in the region, they must not be ruled out. In fact, even though the group does not yet have a presence in Thailand this could be seen as an opportunity to gain a foothold in Thailand that is simply too good to miss.
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