Wumart intends to control Metros China business and Germany will receive more than 1 billion euros in revenue.

 Wumart intends to control Metros China business and Germany will receive more than 1 billion euros in revenue.

Metro disclosed that after the completion of the transaction, Metro Group is expected to receive more than 1 billion euros in net revenue. The deal valued Metro Chinas companies at 1.9 billion euros. Both parties are expected to complete delivery by the second quarter of 2020 at the latest. Metro Groups M&A process is consulted by Citibank Global Markets European Group and JPMorgan Chase Securities, while Baker McKinsey Law Firm provides legal advice. Rothschild & Co., Paul Weiss, Junhe and Deloitte provide advice to Wumart Group and other firms.

Metro brand keeps independent operation

Metro told First Financial Journalist that by setting up joint ventures, Wumart Group and its technical partners, and Metro Group will be able to play their respective leading positions in the market, and their leading expertise in the wholesale, retail and digital fields, to accelerate the development and digital transformation of Metro China. Metro China has entered the Chinese market since 1996. Its 97 stores in China serve 17 million customers with high-quality food and non-food products, which laid a solid foundation for this collaboration. At present, Metro Chinas business has multiple complementary channels, including o2o, fast-growing food distribution channels and welfare gift channels.

Zhang Wen, founder and chairman of Wumart Group, said: We are very happy to cooperate with Metro Group through the establishment of a joint venture company. We fully agree that Metro China operates independently and maintains a management team led by Kant, President of Metro China.

Olaf Koch, CEO of Metro Group, said: We are very satisfied with Metros achievements in China. Chinas retail market has tremendous growth opportunities, and joint ventures will be able to maximize these opportunities. After careful evaluation, we choose to establish partnerships with Wumart Group and multiple partners. These two companies are trustworthy and respected partners of Metro. They share the same values with Metro, can bring a lot of resources and expertise, and promise to seek development on the basis of Metros past achievements and footprints in China.

We will support Metro China in achieving its goal of becoming a leading all-channel food supply expert in China, said Zhang Feng, CEO of Multipoint. We believe that we can help Metro China achieve rapid business growth and efficiency improvement, and enhance customer experience through online and offline digital solutions by utilizing multi-point mature and advanced digital capabilities.

First Financial Journalist understands that Metro China will continue to operate independently under the Metro brand in the future, while the headquarters of the new joint venture company will remain in Putuo District, Shanghai. The new joint venture will maintain the current size of its stores and all commercial operations, while continuing to implement the planned development of new stores. In addition to retaining the current management team led by Kant, the joint venture company will retain the existing staff team. Metro Group will win two seats on the seven-member board of directors of the holding company of the new joint venture company and will continue to play a role in the joint venture corporate governance.

In addition, a dedicated quality control committee led by a representative of Metro Group will be fully involved to monitor and ensure that the joint venture company continues to meet Metros global standards in terms of quality and operating standards.

Digital retail with additional codes

This is not the first time that Metro is going to sell its business in China. It has been reported that Ali is negotiating with Metro to buy a part of the Chinese business of the German retailer. The negotiations are still in the early stages and there is considerable uncertainty in the future. More sources said that before the acquisition of Darun Fat, Ali had talks with Metro, but after Ali acquisition of Darun Fat, the negotiations between Metro and Ali were temporarily ended. At that time, Ali said to the first financial journalist, No comment on market rumors.

It is not the first time that foreign retailers have sold stores or shares in the Chinese market. For example, in the near future. Suning Easy Buy (002024.SZ) announced that Suning International, a wholly-owned subsidiary of the company, intends to invest 4.8 billion yuan in the acquisition of 80% of Carrefour China. After the completion of the transaction, Suning E-Buy became the controlling shareholder of Carrefour China, and Carrefour Groups share-holding ratio dropped to 20%.

In recent years, with the high cost and fierce competition in e-commerce, there has been a huge pressure on the earnings of real retailers. We have seen that many retail enterprises have experienced a tide of closure. Some foreign retailers choose or withdraw from the market or sell their shares. For example, Easy to buy and Lotte are gradually withdrawing from the Chinese market, while Carrefour sells the controlling right of Chinese business to Suning. Choice in line with business logic. Metros move is understandable, depending on how the future receiver integrates. Senior retail analyst Shen Jun pointed out.

Speaking of future integration, Claude Sarrailh, CEO of Metro China, said: We are pleased to choose Wumart Group as a joint venture partner, which will enable Metro China to continue to develop on the basis of its existing achievements. Wumart attaches great importance to all assets of Metro China, including employees, operational expertise and systems. We believe that Wumart Group and many points will accelerate our new retail transformation and ensure that Metro continues to succeed in the rapidly changing and competitive Chinese market. We anticipate that our cooperation will achieve many significant synergies. We look forward to continuing to provide services to Chinese customers and further expanding our business through digital operations, new stores and other growth initiatives.

Metro said it would benefit from its joint efforts with Wumart Group and other companies in procurement, better access to local fresh products, and thus provide customers with more abundant products. Metros stake will ensure its continued service capability and food quality, while ensuring a wide range of imports for all customers. The new joint venture will continue to implement all current customer loyalty projects and to implement the existing business agreements between Metro and wholesale business partners, suppliers and other service providers.

Wumart Group will further improve the operational efficiency of Metro China and optimize customersshopping experience through a multi-point proprietary operation system. Wumart Group and many points will integrate offline and online services and technology of digital retail expertise, and will help Metro China to enhance its digital capabilities and accelerate the development of the retail market in China.

Source: First Financial Responsibility Editor: Guo Chenqi_NBJ9931