Wumart buys CP Lotus stores
Print Edition
Chinese supermarket operator Wumart Store Inc said it will pay HK$2.34 billion (US$302 million) for 36 outlets of CP Lotus Corp on China’s mainland to grow its presence and raise market awareness amid strong competition from online retailers.
Wumart will also acquire around 9.99 percent of CP Lotus’ stake for HK$547 million while CP Lotus will purchase 13.77 percent of Wumart’s shares for HK$2.89 billion, the two companies said in a joint statement yesterday.
The acquisition of CP Lotus allows Wumart an immediate entry into important geographic regions such as east China, according to the statement.
Wumart will acquire 36 stores in Shanghai, Beijing and other regions, excluding Guangdong and Hunan provinces.
The share purchases will enhance the competitive position of Wumart and CP Lotus, and each company will appoint representatives to each other’s board once the proposed acquisition is completed.
CP Lotus operates 57 retail stores under the Lotus brand in China, according to its annual report last year. The retailer recorded a loss of 392 million yuan in 2012 amid a slowing Chinese economy and intense competition especially from online vendors.
Wumart had around 1.8 percent share among China’s hypermarket chains, compared with CP Lotus’ 2.3 percent in 2012, according to market research firm Euromonitor International.
Sales in China’s urban fast moving consumer goods market grew 7.1 percent in the two months ended on June 14, below the 8.4 percent rise in the earlier two-month period due to lower family expenditure, according to consumer research firm Kantar Worldpanel.
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