Retailing, Franchising, and Consumerism Business Intelligence in China

Gome To Acquire 578 Unlisted Stores From Controlling Shareholder

Hong Kong-listed Gome Electrical Appliances Holding Limited plans to invest HKD11.268 billion, which is about CNY9 billion, to acquire 578 unlisted store assets from controlling shareholder Huang Guangyu.

According to the report, Gome Electrical Appliances will pay HKD2.2 billion in cash and the remaining will be realized by share allotments and stock warrants. If the deal passes its audit, the acquisition value will not need further adjustment. After the unlisted stores are merged into the listed company successfully, Huang will exercise all stock warrants and his stake in Gome Electrical Appliances will further increase from the current 32.43% to 55.34%.

Gome was listed in Hong Kong in 2004 and for the sake of shareholders, the listed company only included stores that already made profits at that time. After over ten years, Gome will finally realize its overall listing.

Over ten years of development, the number of unlisted Gome stores increased from dozens to 578, covering 181 cities in China. Meanwhile, the number of Gome's listed stores is 1,136. Gome said that on the completion of the acquisition, the company's store scale will reach 1,714, which can better realize synergistic effects, reduce related party transactions, and simplify the corporate governance structure.

Gome's annual financial report for 2014 showed that the company realized sales of CNY60.36 billion, a year-on-year increase of 7%; and its net profit increased by 43.4% to CNY1.28 billion. In addition, during the first quarter of 2015, Gome realized operating revenue of CNY14.5 billion, a year-on-year increase of 8.28%; and it achieved net profit of CNY293 million, a year-on-year increase of 9.33%.

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