By Adam Coleman
BEIJING: China’s largest retailer of home appliances, Gome Electrical Appliances Holding, has secured a deal to acquire its competitor and China’s third largest player in the sector, China Paradise Electronics Retail.
China Paradise’s management accepted a cash and share swap offer valued at more than HK$5.27 billion ($A896 million).
Gome Chairman Huang Guangyu, ranked as China’s richest man last year, will remain in his position as chairman of the new company, while current China Paradise Chairman Chen Xiao will become the chief executive officer of the merged company.
Huang will own 51.2 per cent of the new company while Chen will hold a 12.5 per cent stake. Gome is reported to have offered one share and an additional cash amount for every three shares in China Paradise.
After the acquisition, China Paradise will maintain its Yolo brand, while its current merger agreement with China’s fifth largest home appliance retailer, Beijing Dazhong Electrical Appliances, remains effectual.
The acquisition creates a retail giant with around $A10.5 billion in annual sales revenue and captures one tenth of the entire Chinese consumer electronics market.
"The deal will help us to strengthen our leading position in China’s consumer electronics," Huang said.
The biggest consumer electronics chain in the United States, Best Buy recently spent $US180 million when it acquired Jiangsu Five Star Appliance in May and the retailer opened its first mainland store in Shanghai last month.