China’s Wumart Stores Inc. will acquire 36 stores and a 9.99 percent stake in Thai grocery retailer CP Lotus in a share-swap deal worth $374 million, the companies announced yesterday. CP Lotus, whose parent CP Group is weighing a bid for Hong Kong supermarket chain ParknShop, will retain 19 retail stores in southern China and gain a 13.77 stake in Wumart.
Wumart president Xu Ying told the South China Morning Post that through the deal his company, which operates 541 stores in China, will gain prime retail locations in Shanghai and Beijing. Most of Wumart’s stores are in northern China. The company currently controls 1.8 percent and 0.3 percent of China’s fragmented hypermarket and supermarket markets.
But that market is starting to consolidate, according to the Wall Street Journal. Wal-Mart Stores, Inc. is eyeing Chinese acquisitions, while other companies are merging or forming joint ventures. At the beginning of October, British supermarket giant Tesco struck a $558 million deal with state-run China Resources Enterprise, in an attempt to end its nearly nine years of losses in the country.