(Bloomberg) -- Low-cost retailer Miniso Group Holding Ltd. plans to acquire a significant stake in supermarket chain operator Yonghui Superstores Co. for 6.27 billion yuan ($889 million) to build on its presence in China.
“The acquisition will expand the group’s investment and operational channels in the daily necessities retail business, enabling the group to diversify its cyclical business risks, which is of significant strategic importance,” Miniso said in a statement to the Hong Kong stock exchange late Monday.
Miniso’s American depositary receipts tumbled as much as 20% in New York trading on Monday, the most intraday since March 2022. Its ADRs had already slid 19% this year through Friday’s close.
Yonghui operates about 850 stores across more than 25 provinces in mainland China. The Shanghai-listed company posted a net loss of 1.36 billion yuan during 2023 as revenue declined from a year earlier.
Miniso plans to buy a 29.4% stake in Yonghui from DFI Retail Group Holdings Ltd.’s the Dairy Farm Co., and two units of JD.com Inc. Miniso is offering 2.35 yuan for each share, which represents a premium of about 4.4% compared to the closing price on Monday, according to Bloomberg calculations.
Miniso expects to become the largest shareholder of Yonghui after completion of the deal, which is subject to regulatory and shareholder approvals.
--With assistance from Katrina Compoli.
(Adds Monday trading and annual trading details in third paragraph.)
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