Retailing, Franchising, and Consumerism Business Intelligence in China

Fujian New Huadu Plans To Acquire Six E-Mart Stores For CNY125 Million

Fujian New Huadu Supermarket Company Limited has published a report, stating that it plans to invest CNY125 million to acquire the entire stake in four foreign-owned enterprises of E-Mart.

According to the report, these four enterprises have six stores in Ningbo, Changzhou, Hangzhou, and Taizhou, with three in Changzhou and one in each of the other cities.

Upon the completion of the acquisition, E-Mart's subsidiaries in these four cities will become fully-owned subsidiaries of New Huadu. New Huadu said it will complete the transaction with its own funds, and no related party transaction or major asset restructuring will be involved. New Huadu will pay off the deal in three payments: the first payment will cover 20% of the transaction amount, the second will cover 30%, and the third will cover the remaining 50%.

However, the transaction is still waiting for the approvals from the board of directors of New Huadu and the related commerce department.

The report published by New Huadu revealed that E-Mart invested USD50 million in Ningbo subsidiary, USD50 million in Changzhou subsidiary, USD20 million in Taizhou subsidiary and USD49 million in Hangzhou subsidiary. In 2010, the operating revenue of these four enterprises was CNY90.45 million, CNY42.55 million, CNY43.29 million, and CNY115 million, marking losses of CNY28.85 million, CNY21.83 million, CNY19.06 million and CNY4.79 million, respectively. In addition, during the first nine months of 2011, the Ningbo, Changzhou, and Taizhou subsidiaries continue to lose money, with exception to the Hangzhou branch, which earned CNY460,000.

New Huadu said that the acquisition will help the company rapidly enter the Jiangsu and Zhejiang retail market to expand its development in provinces outside Fujian. The move is in line with the strategic goal of the company and will have positive influence on the realization of its strategy.

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