Dairy Farm International Holdings Ltd, an operator of supermarkets and retail stores, is buying a 20-per-cent stake in Yonghui Superstores Co. for 5.69 billion yuan ($925 million) as it seeks to tap into China’s growing market.
“Dairy Farm has for some time been looking for opportunities to participate in the large- and high-growth Chinese market,” Graham Allan, chief executive officer of Dairy Farm, said in a statement to the London Stock Exchange. “This strategic partnership with Yonghui provides an attractive way to do that.”
Dairy Farm, which runs more than 5,800 supermarkets and health and beauty stores, as well as other retail outlets across Asia, will also collaborate with Yonghui in areas including procurement, fresh-food processing and store development, according to the statement. Yonghui Superstores operated 288 hypermarkets and supermarkets across 17 provinces as of the end of 2013, it added.
The deal is Dairy Farm’s largest acquisition ever, according to data compiled by Bloomberg. Fujian province-based Yonghui is China’s fifth-largest hypermarket company, with a 4.6-per-cent market share last year, according to data from industry researcher Euromonitor International.
China Resources Enterprise Ltd and Groupe Auchan, which owns a stake in Sun Art Retail Group Ltd, are the country’s largest hypermarket companies, with a 14-per-cent market share each, Euromonitor said.
Bloomberg News, edited by ESM
