Retailing, Franchising, and Consumerism Business Intelligence in China

China Nepstar Chain Drugstore Buys 18 Retail Outlets

China Nepstar Chain Drugstore has entered into a definitive agreement with DongGuan Hui Ren Tang Pharmaceutical Company to acquire all of its 18 directly operated retail chain drugstores in Dongguan City, Guangdong Province for cash consideration of RMB2.3 million.

Jiannong Qian, CEO of China Nepstar, commented, "The Pearl River Delta Region is one of the key regions that China Nepstar will focus on to improve our market penetration in 2008. Although we already have strong presence in this affluent region in China, we believe there is a significant potential for further development. Our strategy is to continuously expand market share via organic expansion and synergistic acquisitions. We have every confidence that with our diverse and high quality product offerings, including private label products; proven ability to expand rapidly while increasing profitability; and experienced management team with proven track record; we will be able to manage newly opened or newly acquired stores effectively to maximize shareholder value."

This acquisition will bring the total number of China Nepstar drugstores in Dongguan to over 120 by the end of March.

The 18 drugstores operated by Dongguan HRT generated total revenue of RMB12 million in 2007. These stores are mostly located in the Da Lang, Cha Shan and Da Ling Shan districts in Dongguan. China Nepstar expects to take over the operations of the 18 stores in the first half of March. China Nepstar plans to then inventory these stores with its own merchandise and will gradually re-brand the stores.

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