China Daily Updated: 2009-07-01 08:06Shanghai Bailian Group, the country's largest retailer by sales volume, is merging its two supermarket chains to form a retail behemoth that can rival the size and clout of such foreign giants as Wal-Mart and Carrefour.
Bailian, controlled by the Shanghai municipal government, has proposed a merger of two well-known Shanghai supermarkets, Lianhua and Hualian. Hong Kong-listed Lianhua and Hualian are controlled by Bailian.
Although Lianhua and Hualian are both ultimately controlled by the same parent, they have been operating under separate managements and competing with each other, especially in their home city. Lianhua has 3,932 outlets, mostly in Shanghai, while Hualian has 1,946.
In February, Bailian bought 21.17 percent share in Lianhua from Shanghai Industrial Pharmaceutical for 1.06 billion yuan. The acquisition lifted Bailian's stake in Lianhua to a controlling 55.2 percent.
The proposed merger calls for the transfer of the entire share capital of Hualian to Lianhua for a total consideration of 492 million yuan in cash. Lianhua said in a statement to the Hong Kong stock exchange that it would take over management of Hualian after the acquisition, but would continue using the Hualian brand in most of the outlets.
The merger, when complete, will increase the number of outlets under the direct management of Lianhua to 5,268 from 3,932, the company said. Of the total, 3,184 will be full-service supermarkets and the remaining will be neighborhood mini-markets.
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