News Article: Wal-Mart Buys Chinese Chain
Wal-Mart Stores Inc has agreed to acquire a hypermarket chain in China for about $1 billion, according to people familiar with the transaction, in a deal that could give the world’s largest retailer the biggest food and department store network in China. The deal for the Chinese hypermarkets of Trust-Mart, a closely held Taiwanese company, comes as foreign retailers look to tap China’s fast-growing economy, large population and expanding middle class. It also follows Wal-Mart’s recent exit from both Germany and South Korea. If it is approved by Chinese regulators, the transaction would vault Wal-Mart past its archrival, Carrefour SA of France, in number of hypermarkets in China. Wal-Mart beat out Carrefour for the Trust-Mart purchase, according to people involved in the deal. Hypermarkets are giant stores that sell a wide range of general merchandise and food. While Wal-Mart has struggled in some overseas markets, it can’t afford missteps in China. Its US business gains are slowing, and costs are rising, forcing the company to look elsewhere for expansion. The company has said it plans to add 18 to 20 new stores in China this year. It currently has a total of 66 stores in China, including 61 hypermarkets. The transaction is structured to take place in phases. The Bentonville, Arkansas, company will acquire 31 stores initially, according to a person involved in the transaction. Then, over the next three years, Wal-Mart will acquire the remainder of Trust-Mart’s 100 stores as each outlet meets various criteria, including compliance with fire codes. Details of the payment weren’t disclosed.