Retail News
- Retailers merge in consolidation drive
Date: 20-Mar-2007 Sources: (Shenzhen Daily)
THE State-owned parent of Chinese retailer Wuhan Zhongbai Group Co. Ltd. merged with two peers, the companies said yesterday, forming a major new retailer as the government seeks to consolidate the sector and boost competitiveness.
An asset management arm under the government of Central China's Hubei Province had injected the holdings of the three firms' parent companies, valued at 1.2 billion yuan (US$155.2 million), into a new holding company Wuhan Shanglian (Group) Co., the firms said in separate statements.
The government arm would hold a 70.55 percent stake in the merged retailer, while another local investment firm has invested 500 million yuan for the remaining 29.45 percent.
Wuhan Zhongbai ranked 14th in sales among hypermarket retailers in China in 2006, Euromonitor data showed.
France's Carrefour was largest in the hypermarket category, while U.S. retailer Wal-Mart Stores Inc. ranked 11th, according to the Ministry of Commerce.
The merger of three local government-run retailers in Hubei marks the latest official effort to consolidate the highly fragmented industry, in order to compete with global giants such as Wal-Mart and Carrefour that are expanding aggressively in China.
Bailian Group, China's top retailer, was formed in 2004 when four State-owned firms in Shanghai were merged.
In another case, Chengdu People's Department Store Group (CPDSG) has transferred 75 percent of the stake of Chengdu People's Department Store Company (CPDSC) and 5 percent of the stake at Chongqing Dikang Department Store (CDDS) to Shenzhen Maoye Emporium Ltd. for 49.799 million yuan.
CDDS is a holding subsidiary of CPDSC which holds about 95 percent of the company's stake. CPDSG holds 5 percent of the stock of Chongqing Dikang, so with this transfer, Chongqing Dikang has totally separated from the department store group.
The government has also been consolidating other sectors. In a deal last August, the Shanghai government created a major foodstuffs producer through the merger of the State-owned parent of Shanghai Bright Dairy & Food Co. Ltd., China's biggest maker of dairy products, with three local peers.
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