China

Chinese Department Store Wangfujing Terminates Plans to Take Over Xi’an Kaiyuan

Summary:

  • Leading Chinese department store operator Wangfujing Group (600859.SS) recently announced that it has decided to terminate plans to acquire 100% of Xi’an Kaiyuan Investment Group, as Stockstar reports.
  • Wangfujing said that the company had terminated its plans because it had failed to reach an agreement with the seller of the stake in Xi’an Kaiyuan, namely, Xi’an International Medical Invest (000516.SZ).

Why It Matters:

  • At the end of 2016, Wangfujing announced plans to acquire a 100% stake in Xi’an Kaiyuan Investment Group, a unit under Xi’an International Medical Invest. However, at the time the acquisition price was not settled.
  • Xi’an Kaiyuan Investment Group is a leading player in Northwestern China’s retail market. Xi’an Kaiyuan was Xi’an International Medical Invest’s core asset, but Xi’an International Medical Invest has been increasing its dependency on medicare businesses in recent years because the company believes that gross margins in the retail business are declining.
  • Wangfujing is headquartered in Beijing and has little coverage in Northwestern China. The company hoped that the acquisition of Xi’an Kaiyuan could help it expand in this region.