Suning.com to buy 80% of Carrefour China for $699 million
Suning.com operates a network of over 8,881 stores in more than 700 cities and runs the country’s third largest e-commerce platform
Suning.com plans to buy an 80 per cent stake in Carrefour China for 4.8 billion yuan (Dh2.5bn) in cash, as French retailer Carrefour rethinks its exposure to the world’s No 2 economy.
Suning.com signed a share purchase agreement with the French company and Carrefour Nederland, according to a statement to the Shenzhen stock exchange. The deal, pending approval from the Chinese regulator, has been cleared by Carrefour’s board and is expected to close by year-end.
Carrefour Group will retain a 20 per cent stake in the business and two seats out of seven on Carrefour China’s Supervisory Board, the French company said in a separate statement. The transaction represents an enterprise value of $1.6 billion (Dh5.8bn) for Carrefour China, it said.
Carrefour is among a growing number of European retailers scaling back their presence in China amid a rapid shift to online shopping that favored home-grown giants like Alibaba’s TMall and JD.com. Germany’s Metro is said to be offloading a majority stake in its Chinese business. The French company’s network of sprawling hypermarkets in the Asian nation have struggled to keep up growth and profitability thanks to competition from online retailers.
Yet the group’s decision to retain a 20 per cent holding shows how China remains a strategic market for global retailers. Keeping that stake will allow Carrefour to maintain a foothold in an innovative retail market, a company spokeswoman said Sunday.
For Suning.com, the deal is expected to cut procurement and logistics costs and boost profitability, the company said. After the completion of the deal, the operation of Carrefour China’s current structure and business will remain independent “for a period of time”, it added.
Carrefour, which operates 210 hypermarkets and 24 convenience stores in China, has been present in the country since 1995. In 2018, Carrefour’s Chinese business generated net sales of €3.6bn or 28.5bn yuan. Its earnings before interest, tax, depreciation and amortization, or Ebitda, stood at €66 million or 516m yuan.
Suning.com operates a network of over 8,881 stores in more than 700 cities and runs the country’s third largest e-commerce platform.
Updated: June 23, 2019 06:13 PM