Retail News
- Suning Appliance drops bid for Dazhong
Date: 14-Dec-2007 Sources: (Shenzhen Daily)
GOME Electrical Appliances, China's top electronics retailer, said it was discussing a possible acquisition of Dazhong Electrical Appliances after rival Suning Appliance Co. abandoned a plan to buy Dazhong.
'We have always been in touch with Dazhong. There may be a result fairly soon,'Gome president Chen Xiao said Thursday, commenting on a report in the Shanghai Securities News that his company had bid for Dazhong.
Shenzhen-listed Suning, China's second-biggest electronics retailer, said Thursday that it had abandoned its plan to acquire Dazhong because the companies disagreed on key issues.
It did not elaborate on why it terminated acquisition talks, which began in April, but the Shanghai Securities News quoted unnamed sources as saying the reason was a higher bid by Gome.
Domestic media have reported Dazhong was asking a range of potential buyers for 3 billion yuan (US$407 million).
Suning said it would now grow mainly by expanding its own outlets.
'Dazhong is strategically important for both companies,'said Wu Hongguang, analyst at United Securities.
A purchase of Dazhong, which controls half of the electronics market in Beijing with about 6 billion yuan in annual sales, would have helped Suning catch up with Gome in an industry where firms are expanding frantically to win market share, she said.
At the end of June, Suning had 413 stores across China while Gome had 654. Dazhong has more than 100 stores.
Domestic electronics retailers are bulking up partly to face toughening competition from foreign rivals such as Best Buy, the largest U.S. electronics retailer.
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