Business Intelligence on Retailing, Franchising, and Consumerism in China

Wal-Mart Suspends Merger Of Trust-Mart In China

According to reports in local media, Wal-Mart has suspended the merger of Trust-Mart stores in China.

Though Wal-Mart gave no comment to the suspension of the merger, an insider revealed that Wal-Mart previously invested tens of millions in the renovation of Trust-Mart's three outlets in Shenzhen and Guangzhou, but the performance of these stores decreased by nearly 30% after the renovation. In addition, several Trust-Mart executives departed from the company during the three-year merger period. These results have made Wal-Mart re-consider its merge project and suspend it temporarily.

In February 2007, Wal-Mart invested USD264 million in acquiring a 35% stake in Taiwan-based Bounteous Company Ltd., the operator of Trust-Mart in China. According to the agreement signed by the two parties, Wal-Mart promised to buy the remaining Trust-Mart stock in February 2010 for USD320 million on the condition that Wal-Mart can complete its renovation of Trust-Mart's outlets. Otherwise, Wal-Mart will not need to complete its full acquisition of Trust-Mart in China.

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