Wal-Mart buys 35% in China retailer

Wal-Mart Stores, the world’s biggest retailer, agreed to buy 35% of Trust-Mart, a hypermarket operator in China, to expand in the world’s fastest-growing major economy and challenge Carrefour. The investment may lead to Wal-Mart taking ownership control of the operator of 101 hypermarkets in China, the Bentonville, Arkansas-based Company said in a statement on Tuesday. Wal-Mart didn’t release financial details. Buying Trust-Mart would more than double Wal-Mart’s stores in China and allow it to win customers from Carrefour, operator of more than 1,000 supermarkets in the world’s most populous country. On October 17, a person familiar with the negotiations said Wal-Mart planned to acquire the entire Chinese retailer in a deal that valued it at about $1 billion. “Wal-Mart’s expansion in China is too slow, compared with that of Carrefour,” said Hu Hongke, a Shanghai-based analyst at China Merchants Securities. “Expanding through acquisitions would be a growth short-cut in China, where good retail locations are limited. Trust-Mart, a closely held chain of grocery and appliance stores with more than 31,000 employees, will continue to operate under its own brand, according to the statement. Wal-Mart is buying the stake in Trust-Mart through purchasing shares in owner Bounteous, registered in the British Virgin Islands. Founded in 1997, Trust-Mart has expanded to more than 20 provinces in China, the company said on its Web site. It sells about 20,000 items, including groceries, home appliances and clothing, in stores with total space in excess of 400,000 square meters. Wal-Mart, which entered China in 1996, operates 73 stores in 36 cities in China. “Through this investment in Trust-Mart we have the opportunity to expand our presence in China,” Wal-Mart vice chairman Michael Duke said in a statement. “This is an important step in bringing additional scale to our China retail business.” He Delai, assistant president of Trust Mart, declined to give financial or other details when contacted by telephone today. Credit Suisse Group said in a statement it advised Wal-Mart on the purchase. Wal-Mart’s overseas ambitions were thwarted last year by its withdrawal from Germany and South Korea, and after Japan’s Aeon won exclusive rights to acquire the supermarket company Daiei last October. China’s retail sales grew 13.7% last year to $770 billion last year, equivalent to one quarter of the US market.

Courtesy: EconomicTimes
For More Detail in Retail India visit: http://www.retailindia.tv