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Wumei seals majority stake in B&Q China
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BEIJING-BASED supermarket chain Wumei Holdings will pay 1.4 billion yuan (US$225 million) for a majority stake in home decorating chain B&Q China whose parent Kingfisher failed to spur growth in the home decoration market in the world’s second-largest economy.
The all-cash takeover will be subject to approval from China’s Ministry of Commerce, and is set to complete in the first half of 2015, Kingfisher said in a statement yesterday.
“I am delighted to have found a strong retail partner to help us release the financial value of our business in China,” Veronique Laury, Kingfisher’s group chief executive, said in a statement.
“This will enable us to focus our financial resources and management talent on the large and attractive European home improvement market,” she added.
Xu Zhicheng, an analyst with Guotai Junan Securities, said Wumei could leverage its overall data management system and dealers’ network within the country to boost B&Q’s performance.
He also added that Wumei’s takeover price is reasonable.
Wumei has 650 supermarkets and 10 department stores across the country.
B&Q opened its first store in China in Shanghai in 1999 but demand for do-it-yourself home decoration hasn’t taken off in China as in Western markets.
B&Q now has 39 stores in 17 cities, down from 63 stores in 25 cities at its peak in 2007.
In the third quarter of this year, Kingfisher’s retail losses were 4 million pounds (US$6.2 million) in China as sales fell 10.6 percent to 97 million pounds due to the slowing property market and restrictions on home purchases.
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