Wumart looks to buy CP Lotus' China outlets
WUMART Stores Inc, the Chinese supermarket operator, plans to purchase outlets from retailer CP Lotus Corp, according to a source.
Payment will be made in stock, the person said. CP Lotus is partly owned by a unit of Thai billionaire Dhanin Chearavanont's Charoen Pokphand Group.
A slowing economy and rising competition are encouraging consolidation in China's retail industry. Tesco plc this year announced a joint venture with China Resources Enterprise Ltd that will see the British firm merge its more than 130 stores in China with the Hong Kong-listed company.
Wumart has the ability to turn around CP Lotus stores that are underperforming, especially in Beijing, said Frank Xu, a Shenzhen-based analyst at Guotai Junan, yesterday.
CP Lotus operates 57 retail stores under the Lotus brand in China, the company said in its 2012 annual report. It reported a loss of 392 million yuan (RM203 million) last year amid a slowdown in the Chinese economy and greater competition.
Wumart's net income rose 2.7 per cent to 602 million yuan last year. As of June 30 this year, it had a retail network of 541 stores, with 145 superstores and 396 mini-marts.
Shares of Wumart and CP Lotus were both halted from trading in Hong Kong yesterday.
Wumart held a 1.8 per cent share in China's hypermarket industry in 2012 and Charoen Pokphand Group had 2.3 per cent, according to Euromonitor International. Bloomberg