Breaking | Wumart buys Lotus stores for HK$2.3b

Wumart Stores, which operates a supermarket chain on the mainland, will acquire most of the Lotus supermarkets on the mainland in a share-swap deal worth HK$2.3 billion, it said yesterday.

The Lotus chain, operated by Charoen Pokphand Group, is owned by Thailand's richest man, Dhanin Chearavanont. After the acquisition, Wumart will own all the Lotus supermarkets on the mainland except for branches in Guangdong and Hunan provinces, which will remain under Lotus management.

CP Lotus would acquire a 13.77 per cent interest in Wumart and in exchange give a 9.99 per cent stake to Wumart, the two companies said at a press conference yesterday.

"Through this partnership, we will gain prime locations in Shanghai and Beijing that would be hard to achieve organically," Wumart president Xu Ying said, adding the choice of a share swap, rather than cash, was not due to reservations about the viability of the stores. "On the contrary, we have confidence in the partnership and see growth prospects."

Although the deal does not signify a complete exit from the mainland for CP Lotus, it exemplifies the highly challenging and fragmented environment facing supermarket retailers there.

Lotus is the second foreign supermarket operator to join hands with a domestic chain this year. Tesco, the world's third-largest retailer by revenue, formed a joint venture with state-backed China Resources Enterprise after struggling for nearly a decade to crack the market.