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Jingkelong takes Shoulian stake

(China Daily)
Updated: 2007-02-13 08:57

MajorretailerBeijingJingkelong Co will further expand its operation through a share purchase deal with anotherretailinggroup in the capital city.

It has agreed to buy an 11 percent share in Shoulian Group for 50 million yuan, the company said in an announcement at theHong Kongstock exchange yesterday.

The purchase enables Jingkelong, the 27th-largest retailer in China, to take over around 40 Shoulian retail outlets, which will operate as franchised stores under the name of Jingkelong.

The deal reflects fierce competition in the retail sector stemming from the nation's fast growing consumer market.

The purchase agreement comes after a series of new outlets were opened by Jingkelong, which reported sales of 3.2 billion yuan in the first nine months of 2006. After raising $74 million in itsinitial public offeringin Hong Kong in May 2006, it also purchased eight Fulande stores, a retailer mainly operating in the suburbs of Beijing, last year.

The deal is also seen as a prologue to further integration of the two groups, as Jingkelong says it will have priority in purchasing a stake in Beijing Xidan Friendship Group, which controls around 50 percent of Shoulian Group.

Shoulian is a daily consumer products retail chain operator that has three hypermarkets, 21 supermarkets, one discount store and 16convenience stores in Beijing.

The deal has increased Jingkelong's outlets from 177 to 212 in the capital city, "but that is still a bit behind our goal", said a spokesman from the company.