New Huadu has signed an agreement to buy two stores in China from South Korean retailer E-Mart.
One of the stores is in Shanghai, and its purchase price is reportedly CNY5.4 million; and one is in Kunshan and reportedly sold for CNY3.6 million.
E-Mart previously sold eight supermarkets to New Huadu and Yonghui Superstores.
According to New Huadu, the two stores involved in the acquisition are the Mudu store in Kunshan with registered capital of USD15 million and Sanlin store in Shanghai with registered capital of USD170 million. The Mudu store was a foreign-invested store and the Sanlin store was a jointly-invested store.
With the CNY9 million acquisition, New Huadu will fully take over the claims, relevant fixed assets, equipment, and contractual relationships related to the operation of the two stores. By December 16, 2011, the net asset value of the two stores was CNY44.67 million and CNY29.63 million, respectively.
Though E-Mart holds over 30% market share in its domestic South Korean marker and even forced Carrefour and Wal-Mart to withdraw from South Korea, its development in China has not been satisfactory. According to the financial statistics provided by E-Mart's parent company Shinsegae, since 2007 E-Mart has been losing money for four consecutive years. During the 2010 fiscal year, E-Mart lost KRW91 billion in China, which was about USD84 million.