Suning.com takes 80pc interest in CarrefourBusiness | 24 Jun 2019 12:21 pm
Suning.com agreed to buy an 80 percent stake in Carrefour SA’s China unit for 4.8 billion yuan in cash, as the French retailer pares its exposure after struggling to boost profit in China, Bloomberg reports.
Carrefour Group will retain a 20 percent stake and two seats out of seven on Carrefour China’s Supervisory Board, the French company said in a statement yesterday.
The transaction represents an enterprise value of 1.4 billion euros for Carrefour China, which generated generated net sales of 3.6 billion euros or 28.5 billion yuan in 2018. Suning.com’s Shenzhen-listed shares added 6.5 percent in early trading today, as investors rewarded the retailer for closing the deal at a lower-than-expected price.
The Nanjing-based company, which operates about 8,881 stores in more than 700 cities, expects the acquisition to cut procurement and logistics costs and boost profitability, it said in a statement.
Carrefour’s been trying to offload its China operations for years as it struggled to maintain profitability as more shopping moved online, favoring home-grown giants like Alibaba Group Holding. The deal is likely to strengthen Alibaba’s foothold in the fiercely competitive groceries market in China -- the company owns a 20 percent stake in Suning.com and the two are closely allied -- as it attempts to build up a retail empire in the face of slowing e-commerce growth.