UK: Tesco extends Chinese venture holding to 90%
Tesco has paid Taiwanese retailer Ting Hsin GBP180m (US$350m) to boost its share in Chinese venture Hymall from 50% to 90%.
The purchase will accelerate the UK retailer's growth in China, having signed an agreement in September 2004 with Ting Hsin for a 50% stake in its wholly owned subsidiary of Ting Cao, which owns the Hymall chain of 44 hypermarkets in China.
The retailer's share price was up 1.56%, to 391.7 pence, following today's (12 December) news.
Tesco chief executive Terry Leahy said: "We have seen exciting growth in China since announcing the joint venture two years ago and are looking forward to the partnership entering a new phase.
"Ting Hsin continues to be a large shareholder in the business. They are a valued supplier of food products and we benefit from their unrivalled local knowledge as we grow the Hymall business together."
Tesco said its strategy is to grow throughout China, including Beijing, Tianjin, Shanghai and Guangzhou, with its first Hymall store in Beijing due to open in early 2007.
Ting Hsin chairman Wei Ying-Chiao said: "Ting Hsin has been pleased with the joint venture and the business development of Hymall over the last two years. As Ting Hsin focuses its efforts on its increasingly successful food business, it is appropriate at this time to review the joint venture so as to facilitate faster progress by ensuring greater Tesco involvement.
"Ting Hsin is committed to remaining a shareholder of Hymall and to providing Tesco with guidance and local expertise as it currently gains experience in China."
At the end of last month Tesco missed out as Wal-Mart entered the Indian retail market through a tie-up with Bharti Enterprises.
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