Wumart has walked away from a HK$2.3bn (US$297m) buyout deal, which would have seen the supermarket chain acquire 36 CP Lotus stores across China.
In a brief statement to Hong Kong’s stock exchange on Monday (December 16), Wumart confirmed it would not pursue the purchase, following more than two months of negotiations with CP Lotus a division of Thailand’s Charoen Pokphand Group.
“The company would wish to emphasise that it has taken into account the best interests of its shareholders,” Wumart said.
The deal had been tabled in mid-October as part of a share swap between the companies. Along with stores in Beijing, Shanghai and provinces other than Guangdong and Hunan, Wumart was also set to purchase 10 per cent of CP Lotus’ shareholdings at a cost of HK$548m (US$70m). In exchange, CP Lotus would pay HK$2.9bn (US$37m) for a 14 per cent share in Wumart.
The Wall Street Journal suggested the deal would have helped consolidate China’s fragmented grocery retail market.
CP Lotus operates 57 outlets across China and posted a loss of Rmb392m (US$64m) last year. Wumart, which manages over 500 stores in China, reported a net income of Rmb602m (US$99m) in 2012, up 2.7 per cent from a year earlier.
Share prices in the Hong Kong market for Wumart and CP Lotus declined 7.7 per cent and 5.2 per cent respectively after news about the failed deal emerged.
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