Thailand M&A: CP All / Siam Makro Everyone has a favourite way of telling when bubbles are forming. Tried-and-tested examples include when Japanese groups buy golf courses, when new media buy old and when banks rush to lend to the uncreditworthy. Now Thailand is adding its own: when the country's largest convenience store owner undertakes the biggest domestic deal to date buying the country's largest cash and carry operator. Betting on Thailand's rising income levels is one thing. But paying $6.6bn - an aisle-busting 53 times last year's earnings, or 44 times expected 2013 profits - is just too much. CP All, the buyer, operates 7-Eleven stores. Rising income levels, including a near-doubling of the minimum wage in the past two years, and still-low store penetration have helped its shares treble in three years. That pales next to Siam Makro, the target, whose shares have risen sixfold. CP All says buying Siam Makro will help it showcase and distribute Thai produce in Southeast Asia. Yet the target's expansion plans, barring a new Vietnam venture, are still largely in Thailand. Better instead to consider the deal as adding a distribution channel for CP Group, the unlisted vehicle of Dhanin Chearavanont, a Thai billionaire whose interests range from chicken farming to shrimp processing and, most recently, a 15.6 per cent stake in Ping An. His companies hold 44 per cent of CP All. That does not not make this deal better, but it helps explain why the company is prepared to take on some $6bn in debt, shifting the combined group from net cash of $1.3bn to net debt worth seven times last year's earnings before interest, tax, depreciation and amortisation. Dealmaking in Thailand is unlikely to cool. The top three outbound bids came in the past 18 months - two of them involving Mr Dhanin - and there is as yet no shortage of banks prepared to lend. The bidders should hope this one marks the apogee in valuation terms.