Wumart Stores Inc, Beijing's largest supermarket chain, said it
will pay 279.5 million yuan (US$35.1 million), or 10 percent more
than its initial offer, to speed up its acquisition of the Beijing
MerryMart ChainStore Development Co Ltd after the latest audit.
Wumart agreed to pay 253.5 million yuan (US$31.7 million) for 68
percent of MerryMart in February and promised the principal members
of MerryMart's management 40 million yuan (US$5 million) in
The latest audit of MerryMart's financial records found the
retained profits are "very likely" to turn negative, which led to
Wumart's higher offer, Wumart said in a statement yesterday.
Meanwhile, Wumart will also contribute another 120 million yuan
(US$15 million) to increase the capital scale of MerryMart,
according to the agreement drawn up in February. Wumart would
control 75 percent of the latter when the deal is completed at the
end of this month.
"The acquisition will lower the operating and procurement costs
of both companies and underpin the leading position of the group in
the Beijing retail market," the company said.
MerryMart, with a chain of 23 supermarkets, is the
fourth-largest retailer by size in the Beijing area. Wumart, now
the largest chain in the area, had 12 hypermarkets which sell
clothes, electronics and groceries as well as 47 supermarkets and
436 mini-marts at the end of 2005.
Wumart expects the deal to help elevate its market share to over
5 percent in the greater Beijing area that includes the city of
"We will continue to expand across the nation this year so as to
achieve economy of scale and consolidate our lead in the market,"
Xu Ying, Wumart's director of finance, told China Daily.
Wumart paid 176.7 million yuan (US$22 million) this April for a
28 percent stake in Shanghai-listed supermarket retailer Yinchuan
Xinhua Co. Yinchuan Xinhua operates four department stores and 23
supermarkets in Yinchuan, the capital of the Ningxia Autonomous
Region in north central China.
Wumart also plans to spend 500 million yuan (US$62.5 million)
opening 20 to 30 new mini-marts and four to five hypermarkets in
The Hong Kong-listed company raked in 108.9 million yuan
(US$13.6 million) in net profit in the first half of the year, up
44.2 percent year-on-year. Its shares have soared 84.6 percent this
year, outpacing the 16.5 percent gain of the benchmark Hang Seng
China's home-grown retailers have been expanding aggressively in
recent years to fend off overseas rivals such as Wal-Mart Stores
Inc and Carrefour SA.
Meanwhile, the nation's rising income and growing middle class
is also fuelling demands ranging from overseas electronics to
China's retail sales gained 13.7 percent in July over the same
period a year earlier and the nation's retail sales have maintained
double-digit growth for the past three years.
(China Daily August 22, 2006)