Aeon denies retail JV talks with Bharti, Carrefour silent

PARIS/TOKYO Fri Mar 7, 2014 5:38pm IST

Customer leave an Aeon Big supermarket after shopping in Kuala Lumpur September 4, 2013. REUTERS/Bazuki Muhammad/Files

Customer leave an Aeon Big supermarket after shopping in Kuala Lumpur September 4, 2013.

Credit: Reuters/Bazuki Muhammad/Files

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PARIS/TOKYO (Reuters) - Japanese retailer Aeon denied a newspaper report that it was in talks with the Bharti Group to set up a retail joint venture in India, while France's Carrefour (CARR.PA) declined to comment on whether it was also talking to Bharti.

The Economic Times said earlier on Friday that Bharti Group was in talks with Carrefour and Aeon to set up a joint venture with one of them after the collapse of a similar venture with the world's largest retailer, Wal-Mart (WMT.N), last year.

"This is not the case," an Aeon spokesman told Reuters, when asked about the report.

Both Carrefour and Bharti declined to comment.

"Discussions with Carrefour were at an advanced stage. However, the talks were put on hold due to the entry of Japanese retailer Aeon," the paper cited one of two sources familiar with the negotiations as saying.

"Some of the senior officials of Bharti Retail are in favour of tying up with the French major as it has an existing footprint in India's cash and carry space that would be a perfect match for Bharti Retail," the source added.

Bharti - which is also the parent of Bharti Airtel(BRTI.NS) India's biggest mobile phone carrier - and Wal-Mart broke up their six-year-old joint cash and carry venture in October 2013.

The move left Bharti to find another deep-pocketed partner to support its retail expansion.

Carrefour, which has five cash and carry stores in India, would fold this business unit into a joint venture with Bharti, the Economic Times said.

Carrefour would also invest in back-end support and commercial real estate companies owned by Bharti, it added.

Commenting on his plans for India at Carrefour's 2013 earnings conference earlier this week, Chief Executive Georges Plassat told investors: "We are currently thinking about India. We have a small business in India, it does not bring any losses or gains but the true challenge is to know how we tackle India for the next 20 years."

Describing India as "a very complex, very challenging country", Plassat said Carrefour would not expand there "on our own anyway".

Global foreign firms have long been frustrated in their efforts to set up shop in India due to complex and restrictive retail legislation.

In late 2012, the government of Prime Minister Manmohan Singh opened $500 billion retail industry to foreign operators, allowing companies such as Wal-Mart and Tesco (TSCO.L) to own majority stakes in Indian chains for the first time. However, India left it up to individual states to decide whether or not to allow foreign retailers.

So far, fewer than half of the 28 states have adopted the policy, making it harder for retailers to exploit economies of scale by setting up sourcing and cold storage networks that could serve stores in neighbouring states.

Polls show that main opposition Bharatiya Janata Party (BJP) is on track to win the most seats nationally in elections due by May.

The BJP is considered to be more investor-friendly than the Congress party but opposes foreign direct investment in supermarkets because of its impact on small shopkeepers. It unseated Congress in Rajasthan elections in December.

(Reporting by Dominique Vidalonin Paris and Ritsuko Shimuzu in Tokyo, editing by David Evans)

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