Wal-Mart buys stake in Chinese hypermarket group

US: Wal-Mart acquires stake in Chinese hypermarket operator

Author: just-style.com | 27 February 2007

Wal-Mart Stores said Monday (26 February) that it had acquired a 35% interest in Bounteous Company Ltd, which operates 101 Trust-Mart hypermarkets in 34 cities in China.

Under terms of the agreement, Wal-Mart will acquire a controlling stake of the chain in the future.

Financial details weren't disclosed, but Reuters, citing a source familiar with the deal, reported in a story from Hong Kong that, if conditions were satisfied, Wal-Mart would pay a total of US$1bn for all of Bounteous and would have sole control of the company in 2010.

Wal-Mart is hardly a newcomer to the world's most populous country, already operating 68 Wal-Mart Supercenters, three Sam's Clubs and two Neighborhood Markets in 36 Chinese cities, where it employs more than 37,000.

"Through this investment in Trust-Mart, we have the opportunity to expand our presence in China, one of the world's fastest growing retail markets," said Michael Duke, vice chairman of the Bentonville, Arkansas-based retail firm.

"This is an important step in bringing additional scale to our China retail business and enabling us to do what we do best - serving our customers with improved service, high quality and innovative products, and lower prices."

Wal-Mart is the world's largest retailer, with France's Carrefour a distant second. However, Carrefour is the largest foreign retailer in China, although its volume there is less than the estimated $3bn done in the country by Trust-Mart and Wal-Mart taken together.

Trust-Mart and Wal-Mart will continue to operate under their respective nameplates.

"This alliance positions Trust-Mart to offer even higher levels of customer service to Trust-Mart's loyal customers as we benefit from Wal-Mart expertise in logistics and operations," said John Yu, chairman of Trust-Mart.

"It also will give our suppliers new opportunities to expand in China and potentially become part of Wal-Mart's global vendor network."

Credit Suisse advised Wal-Mart on the transaction, and UBS Investment Bank was Trust-Mart's financial advisor.

By Arnold J Karr.

Sectors: Finance, Retail

Companies: Wal-Mart, Carrefour