Miniso has taken a 30 percent stake in fellow Chinese supermarket chain Yonghui Superstores for CNY 6.3 billion (USD 893.05 million), as the lifestyle retailer becomes a majority shareholder in the struggling firm.
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A global retailer of lifestyle products, Miniso will buy the shares from units of DFI Retail Group and Chinese e-commerce giant JD.com at CNY 2.35 per share.
With a 21 percent stake, DFI Retail, part of the Hong Kong-headquartered conglomerate Jardine Matheson, said that it had disposed of 1.91 billion Yonghui shares, netting it gross cash proceeds of around CNY 4.50 billion. The company added that the deal, “allows the company to focus a greater proportion of capital to support the growth of its subsidiary businesses across all of its markets,” according to a statement.
Yonghui is a leading retail chain operator in China, and operates approximately 850 supermarkets. It has been listed on the Shanghai Stock Exchange since 2010.
However, the embattled retailer has clocked three straight years of net losses, falling victim to the struggling Chinese business environment, where locals consumers have become more price-conscious and are turning to overseas markets such as Japan, where the yen is weak.
“I firmly believe that this transaction presents great growth potential for our company and will bring long-term value to our shareholders. With our support and leveraging our expertise in design-led products, Yonghui will be poised to develop higher-quality self-branded products to cater to evolving consumer needs. Furthermore, I believe that our collaboration with Yonghui in retail channel upgrade and supply chain will enable us to share resources to further enhance economies of scale, optimise the cost structure and create value for consumers. This transaction will also expand our access to the essential goods sector, allowing us to diversify our business and mitigate cyclical risks,” said Guofu Ye, chairman and CEO of Miniso.
“Meanwhile, we remain confident in and committed to the growth of our existing business, and will continue to strategically invest in its development and expansion. We are determined to achieve Miniso’s five-year development strategy of growing our core business at a compound annual growth rate of no less than 20 percent over the next five years, excluding the potential impact of this transaction.”
Miniso plans to fund the acquisition through internal resources and external financing.