Top Biz News

Wumart to buy East China superstore

By Hui Ching-hoo (China Daily HK Edition)
Updated: 2006-09-09 13:30

Wumart Stores said yesterday it would acquire a 50 per cent stake in a smaller rival in East China's Jiangsu Province. The move reflects the retail chain's ambition to become a national player in an increasingly consolidated retail market.

Beijing's largest supermarket chain, Wumart will spend HK$1.14 billin for half the holding of Jiangsu Times, the second largest retailer in the mainland's biggest provincial economy.

Times now operates 45 superstores in the province - 17 are hypermarkets covering from 10,000 to 25,000 square metres and 28 are mid-sized supermarkets covering from 6,000 to 15,000 square metres.

Ranked 28th among the top retailers on the mainland in the first half in terms of revenue, the retailer recorded 2.7 billion yuan in revenue and 61 million in net profit in 2005.

The transaction, the third acquisition by Wumart in a year, will be paid in cash and new shares. Wumart will place new shares to CS Investment, which owns Jiangsu Times.

Jiangsu Times will be renamed as Wumart Times after the acquisition.

A Wumart spokesperson said the acquisition would provide a great opportunity for the company to establish the strategic presence in East China, where Shanghai-based Brilliance and China Resources Enterprise' unit Suguo Supermarket dominate the market.

"Times focuses on Jiangsu and neighbouring provinces such as Zhejiang, Anhui, Shandong and Shanghai, where it has already established market access for the coming two years with additional floor space of approximately 150,000 square metres," the spokesperson said.

Wumart is stepping up efforts to scale up its business through acquisitions.

The company paid 176.7 million in April for a 28 per cent stake in Shanghai-listed supermarket retailer Yinchuan Xinhua, which operates four department stores and 23 supermarkets in Northwest China's Yinchuan.

It has just completed the acquisition of MerryMart ChainStore Development, the fourth largest retailer in Beijing, at the end of last month. It spent 279.5 million yuan to purchase 75 per cent of MerryMart.

"We will continue to expand across the nation this year in order to achieve economy of scale and consolidate our leadership in the market," Xu Ying, director of finance, said last month.

The company has already earmarked 500 million yuan as war chest for acquisitions and opening new stores this year.

Wumart posted a 44.2 per cent growth in net profit in the first six months of 2006 to 108.9 million yuan.