ASEAN KEY DESTINATIONS
Thailand CP group strikes major China retail deal
CHINA’S Wumart Stores Inc will acquire a bulk of CP Group’s retail stores on the mainland and take a stake in one of the Thai group’s companies in an all-stock deal worth US$374 million, helping Wumart to grow its footprint in northern China.
Wumart, an operator of supermarkets, has agreed to buy a majority of the CP Lotus retail stores in China for HK$2.34 billion (US$302 million), the companies said in a joint statement. Wumart will also gain a 10 per cent stake in CP Lotus, which is listed in Hong Kong and controlled by CP Group, theconglomerate run by Thai billionaire Dhanin Chearavanont.
The deal marks another instance where a foreign-ownedretailer in China scales back its presence in the sector. CP Lotus, which has 57 retail stores in China, will part with 36 of its stores in Beijing, Shanghai and various provinces.
Foreign supermarket operators have failed to crack China’s fast-growing retail industry due to intense competition, forcing many to retreat or restructure their operations. Hong Kong-listed CP Lotus made a net loss of 46.7 million yuan (US$7.7million) in the six months ended June.
In August, after nine years in China, British supermarket operator Tesco plc decided to fold its unprofitable operation into state-run China Resources Enterprise Ltd to be a minority partner.
For CP Lotus, it will own a 13.8 per cent stake in Wumart atthe close of their deal.
Wumart, which operated 541 stores in China as of end-June, was advised by JP Morgan. Wumart has a market capitalisation of US$2.4 billion, while CP Lotus has a marketvalue of US$373 million.
Shares in Wumart and CP Lotus were suspended in Hong Kong yesterday pending an announcement.
Dhanin’s CP Group has been in deal making mode across Greater China.
The group has teamed up with private equity firm Carlyle Group to bid for the Hong Kong supermarket operationssold by Li Ka-shing’s Hutchison Whampoa Ltd, in a deal that could be worth between US$3-4 billion, Reuters previously reported.
CP Lotus’s Chairman Ed Chan declined to comment yesterday on the parent’s intention to bid for ParknShop.
CP Group has interests spanning poultry and animal feed,supermarkets and auto making, and has a long history in China as the first multinational to invest in the country’s agri-businessin 1979.--Reuters
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