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Carrefour China’s valuation is only 6 billion yuan.

via:CnBeta     time:2019/6/24 8:03:45     readed:110

Tian Rui, Vice President of Suning Tesco Group, welcomed Carrefour's participation. “We are very pleased that Carrefour China will soon become a member of Suning's family. Suning has always been committed to building a full-scenario smart retail ecosystem, from online to offline. The full coverage from the city to the township, to create a smart retail scene that is visible and accessible at any time, to meet the diverse needs of users."

For the acquisition, Carrefour, a French-based business super giant, commented: “Suning Tesco is China's leading smart retailer. Carrefour China and Suning Tesco have strong complementarities, which will accelerate the development of Carrefour China. ""

Suning said in the announcement that the transaction has been approved by the board of directors of Suning and Carrefour Group, and it is still necessary to pass the anti-monopoly review by the operators of the State Administration of Market Supervision. The transaction is intended to be paid in cash, and Suning Tesco will also provide shareholder loans to Carrefour China as working capital support.

Upon completion of the acquisition, the five supervisory directors of Carrefour China's supervisory board will be appointed by Suning International, and two supervisory directors will be appointed by Carrefour. The chairman will be appointed by Suning International. The management board will be composed of a management director who will be the CEO of Carrefour China and will be responsible for the daily management of Carrefour China.

What Suning has taken a fancy to Carrefour China? What will the future cooperation between the two parties be?

Acquired Carrefour and accelerated the development of Suning

The announcement revealed that after the completion of the transaction, Suning Tesco will retain the existing organizational structure and business composition of Carrefour China, and maintain relatively independent operation for a period of time. Carrefour Chinese personnel, property leasing and other aspects will not undergo major changes.

However, for future cooperation, Suning Tesco will carry out a comprehensive digital transformation of the Carrefour store, and build a supermarket consumption scene of online and offline integration. Specifically, Suning's business - Suning Appliance Home, Suning Red Kids, Suning Polar, Suning Finance, Su Xiansheng Fresh Food, Suning Store, etc. can be docked with Shangchao.

For Suning, 400 million members of Suning's retail system and 30 million loyal members of Carrefour China will also form an effective complementarity, enriching Suning's existing membership ecosystem and enhancing user value. Moreover, Carrefour has a location advantage in first- and second-tier cities, close to densely populated business districts, and has a large number of quality properties, which can also become the advantage of Suning.

In addition, in terms of warehousing and logistics, Suning said that Carrefour China's existing large-scale distribution centers and existing stores can serve as an important support network for Suning's last mile business development. The two sides will continue to optimize and share in warehousing, logistics, personnel, etc., to further complement the logistics warehousing and distribution capabilities of Suning's fast-moving consumer goods category.

Behind the sale of Suning: Carrefour China continues to lose money

Carrefour China officially entered the Chinese mainland market in 1995. It is one of the first foreign-invested retail enterprises to conduct business in China, and is mainly engaged in large-scale integrated supermarket business.

As of March 2019, Carrefour China has approximately 30 million members in China, with 210 large-scale supermarkets, 24 convenience stores and 6 warehouse distribution centers. The total floor area of ​​the store is over 4 million square meters, covering 22 provinces and 51 large and medium-sized cities.

However, from the recent years of operation of Carrefour China disclosed in Suning’s announcement, Carrefour’s operations in China are currently not good.

At the end of 2018, the total owner's equity of Carrefour China attributable to the parent company was -19.27 billion yuan, and the net profit attributable to owners of the parent company in 2018 was -577 million yuan.

For the reason that Carrefour China’s book net assets are negative, Suning Tesco explained in the announcement: Carrefour’s negative net book value in China is mainly due to the impact of the Internet in offline retailing in recent years. Carrefour China’s positive response, but still Brought a phased operating loss.

However, Suning Tesco still believes that Carrefour China is a leading company in the industry, with strong supply chain capabilities, rich offline operation experience, high brand awareness, and the network optimization effect has gradually emerged in the past two years, and there is room for improvement in the future. .

Moreover, the current price of Carrefour China is not high, 480 billion yuan 80% equity, simple conversion, in this transaction, Carrefour China's 100% equity value is only 6 billion yuan. At present, the total market value of Yonghui Supermarket is as high as 101.5 billion yuan, which is close to 17 times of Carrefour China's valuation.

Foreign merchants

In fact, not only Carrefour, the situation of foreign supermarkets in China is generally poor. Foreign retail companies such as Tesco, Lotte Mart and E-mart have quit China, and foreign supermarkets that have stayed are looking for local partners.

In 2014, British retailer Tesco withdrew from China and announced that its business in China was acquired by China Resources Group, ending a long journey in China for 10 years. In 2016, Wal-Mart sold its online retail business in China in exchange forJingdongIn November 2017, Alibaba's HK$22.4 billion won the No. 1 position in China's market performance, directly and indirectly holding a 36.16% stake in Dasheng's parent company Gaoxin Group.

Today, Carrefour has invested in the embrace of Suning.

Industry observers believe that on the one hand, the entire Shangchao industry is facing the impact of online shopping in recent years. The foreign merchants' super-brands are particularly affected by the slow decision-making process, slow change response, and high staff costs. Some foreign brands have taken the initiative to change, combining their own brands and management advantages with the rapid response of Chinese partners and the market's progress, which can better enhance competitiveness and efficiency, and fundamentally more in line with their interests.

Carrefour China has also worked with other local companies.

In January 2018, Tencent Holdings and Yonghui Supermarket reached an equity investment intention for Carrefour China. The three parties will further cooperate in supply chain integration, technology application and business empowerment. But this intention did not end up at the equity level.

In April 2019, Carrefour China also announced its competitors with Suning.GomeAchieved strategic cooperation, the electrical area of ​​more than 200 stores across the country was handed over to Gome, and it is expected to complete the renovation of more than 200 stores by the end of July. But now it seems that this cooperation is now facing a dilemma.

In response to the current situation in which Carrefour China is in the arms of SUNING, Gome responded that "it is actively communicating with Carrefour." Gome adheres to the strategy of "home life", further opens up the supply chain, and cooperates with many other industries, including supermarkets, for win-win development. "

Suning also said, "The follow-up business arrangements for Carrefour China need to wait for the completion of delivery of the project, based on the company's business needs."

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