Miniso Group has recently made a strategic decision to purchase a significant stake in Yonghui Superstores, positioning itself as the largest single shareholder in the prominent Chinese retail chain operator. The acquisition involves Miniso acquiring a 29.4% interest in Yonghui for approximately 6.3 billion renminbi, equivalent to about $892.9 million in cash. Yonghui Superstores operates around 850 supermarkets across China, providing consumers with a wide range of fresh produce and daily necessities.
In the fiscal year of 2023, Yonghui generated an impressive revenue of approximately 78.6 billion renminbi, reflecting its strong presence in the retail market. However, the news of this acquisition did not resonate well with investors, as Miniso's shares listed on the New York Stock Exchange saw a decline of 15% during Monday's trading session.
This downturn highlights the volatility and sensitivity surrounding major strategic moves in the competitive retail space. The acquisition deal is structured through Miniso's subsidiary, Guangdong Juncai International Trading, which has entered into share purchase agreements with various investors in Yonghui, including units of DFI Retail Group and JD.com.
The agreement stipulates that Guangdong Juncai will compensate each selling shareholder at a rate of 2.35 renminbi per share in cash, outlining the valuation approach Miniso is employing in this deal. Approval from regulators and Miniso's shareholders is a prerequisite for this transaction, which is anticipated to finalize in the first half of the upcoming year.
To manage the financial aspect of this substantial acquisition, Miniso plans to leverage a combination of its own internal financial resources alongside external financing options. This approach underscores Miniso's careful planning and foresight in its growth strategy. Miniso's Chief Executive, Guofu Ye, expressed strong optimism regarding this transaction, emphasizing the growth potential it presents for the company.
In his statement, he remarked, "I firmly believe that this transaction presents great growth potential for our company and will bring long-term value to our shareholders." Ye further indicated that the acquisition is crucial for expanding Miniso's reach within the essential goods sector, enabling the company to diversify its operations and mitigate risks associated with market cycles. Additionally, Ye reaffirmed Miniso's commitment to nurturing its existing business avenues, pledging to invest in further development and expansion efforts.
"We are determined to achieve Miniso's five-year development strategy of growing our core business at a compound annual growth rate of no less than 20% over the next five years, excluding the potential impact of this transaction," Ye elaborated, spotlighting the company’s ambitious growth trajectory. In terms of market performance, Miniso shares are currently priced at 13.90, reflecting a change of -2.56, which corresponds to a percent change of -15.55 in response to the recent developments.
As the situation unfolds and the company moves forward with its acquisition plans, stakeholders will be watching closely to see how these strategies play out in enhancing Miniso's market position and shareholder value..