Wal-Mart, Tesco, Ren Ren Le to be likely bidders: source


Three well-known global companies have been taking part in the bid for E-Mart’s Chinese operations, according to a U.K.-based company specializing in information on M&As.

Mergermarket, an independent mergers and acquisitions intelligence service, told The Korea Herald that Wal-Mart, Tesco and Ren Ren Le are most likely in line to take over E-Mart’s Shanghai operations and that the players will conduct due diligence on its 10 stores within the next two months.

The event takes place after Korea’s top discount retail chain, owned by the Shinsegae conglomerate, is looking to sell about 10 of its stores in China with low profit figures, including the Beijing branch.

“A dealmaker familiar with the sector, who is monitoring the situation closely, suggested that U.S.-based Wal-Mart, U.K.-based Tesco and China-based retailer Ren Ren Le could be the three leading contenders,” said the intelligence firm. “First-round bids have already been submitted.”

In response, an E-Mart official said the merger and acquisition details could not be confirmed and that its Chinese headquarters is solely in charge of the situation in China.

The expected sale price is reportedly about $290 million. But a dealmaker told the agency that the value of the Chinese stores is “over-stated” and it is likely to be less than $200 million, it said.

The intelligence service also said late last month that E-Mart hired HSBC as its financial advisor for the sale of 10 stores in China.

Another spokesperson at E-Mart said negotiations are now taking place with multiple players involving the Chinese built and scrap project.

E-Mart, which launched Shanghai operations earlier in 1997, is currently operating a total of 27 stores in about 10 different areas in China. The discount chain recorded yearly sales of 36 billion won when it first opened doors and increased that figure to 250 billion won in 2007 and 620 billion won in 2011.

However, the net loss and the equity accounting loss of the company’s Shanghai operations reached 91 billion won and 88.7 billion won last year, respectively.

By Cho Ji-hyun (sharon@heraldcorp.com)