Beijing-based retailer Wumart is going to pay USD 225 million for a majority stake of 70% in home refurbishment chain B&Q in China. The all-cash takeover is set to complete in the first half of the coming year, subject to approval by the Ministry of Commerce.
The agreement follows Kingfisher's announcement in March of its plans to look for a strategic partner to help develop its loss-making B&Q business in China, which is made up of 39 stores and employs 3,000 people.
Wumart, the leading local retail chain store operator based in Beijing, has a retail network of about 650 hyper and supermarkets under the banner Wumart and 10 department stores in northern, eastern and western China. Wumart, like many other retailers operating in China are facing challenges from slower growth, rising costs, and threat from fast growing e-commerce.
The deal may help B&Q leverage on the local connection, shopper understanding and expertise of Wumart. The combined business will have a stronger negotiation power and allow both Wumart and B&Q to expand further in China.