Miniso Acquires 29.4% Shares of Yonghui Superstores

On the evening of September 23, Yonghui, a high-end supermarket chain brand in China, announced that its shareholders, Milk Limited, Beijing JD Century Trading Co., Ltd., and Suqian Hanbang Investment Management Co., Ltd., plan to transfer their shares in Yonghui, which account for 21.08%, 4.05%, and 4.27% of the total share capital respectively, to Guangdong Juncai International Trading Co., Ltd. (Miniso) through an agreement transfer.

After the transaction is completed, the largest shareholder of Yonghui will change to Juncai International, which will hold a total of 29.4% of the company’s shares.

Juncai International’s controlling shareholder is Miniso (Guangzhou) Co., Ltd. Yonghui’s announcement stated that Juncai International and its actual controller Miniso will join hands with Yonghui to transform towards a quality retail model. On the evening of September 23, Miniso‘s U.S. stocks opened significantly lower, and the decline expanded to more than 17% by the time of press.

Yonghui stated that this transaction is beneficial to the company’s long-term development and the realization of strategic goals. The change in equity will not lead to significant changes in the company’s main business and will not affect the company’s independence.

On the evening of September 23, Miniso, which is listed in Hong Kong, also issued an announcement regarding the acquisition of 29.4% of Yonghui’s shares. Miniso stated that the related consideration of 6.27 billion yuan will be paid in cash and funded by the group’s internal financial resources and external financing. After the transaction is completed, Yonghui’s financial performance will not be consolidated in the company’s accounts but will be accounted for as an investment in an associated company.

Regarding the reason for acquiring Yonghui, Miniso stated that Yonghui is a very successful supermarket chain group, with its main business being the sale of selected goods through offline stores and online channels, covering consumers of all ages. To date, it has about 850 stores open. In terms of sales volume, Yonghui has been ranked second in the top 100 Chinese supermarkets for several years. Miniso stated that the company continues to be optimistic about the development of China’s offline retail industry, and this acquisition is in line with the company’s overall strategy and beneficial to shareholders.

Miniso also mentioned that the company has unique capabilities and experience in developing its own brands, designing, and IP products. After the acquisition, the company can provide support to Yonghui through business cooperation. Yonghui can leverage the company’s strengths to develop higher-quality own-brand products at a lower cost, which is expected to enhance Yonghui’s differentiated competitiveness. In addition, the company and Yonghui can share resources through business cooperation to further enhance economies of scale, optimize cost structure, create more value for consumers, and thereby increase the company’s investment returns. Miniso also stated that after the acquisition, the company will expand its investment and management channels in the daily necessities retail business. Through this, the group can diversify the risks of cyclical businesses, which is of significant strategic importance to the group.

With Miniso‘s entry, JD will also significantly reduce its stake in Yonghui through this transaction. In 2015, JD invested more than 4.2 billion yuan and held 10% of Yonghui’s equity by participating in a private placement of Yonghui. Subsequently, its stake further increased through multiple increases.

JD has previously expressed its intention to reduce its holdings in Yonghui. According to an announcement by Yonghui on the evening of June 14 this year, JD World Trade plans to reduce its holdings in the company’s shares by no more than 182 million shares, accounting for no more than 2% of the company’s total share capital, through block trading within three months.

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