Gome finances acquisition of rival Dazhong
Updated: 2007-12-18 14:00
Gome Electrical Appliance Holdings Ltd, China's largest electronics retailer, will finance the 3.6 billion yuan ($488 million) acquisition of Beijing Dazhong Electronics Ltd, with an option to buy the rival later itself.
Beijing Zhan Sheng Investment Co will purchase Dazhong, Gome said in a Hong Kong stock exchange filing Friday. Gome will manage Dazhong, and can buy the Beijing-based electronics retailer later for a minimum of 3.65 billion yuan, it said.
"It's a transition for us to understand Dazhong," Gome Chairman Huang Guangyu said. "We need time to get the regulatory approvals, and there are uncertainties involved, so we adopted this transition."
Gome's delayed purchase of Dazhong comes after Suning Appliance Co, China's second biggest home appliance retailer, scrapped its bid for the Beijing-based retailer on December 13. Gome sold about $811 million of bonds and shares in May to purchase stores and refurbish outlets.
Zhan Sheng's owners Liu Chunlin and Han Yuejun aren't connected to Gome or Dazhong, Huang said. Gome's loan to Zhan Sheng will be secured by Dazhong's shares, according to the statement.
Gome rose 1.7 percent to HK$17.70 in Hong Kong trading Friday, before the statement. The stock has almost tripled this year, compared with the 38 percent increase in the city's benchmark Hang Seng Index.
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