MINISO to buy 29.4% stake in Yonghui Superstores

Lifestyle brand MINISO will purchase a 29.4% stake in Chinese supermarket chain Yonghui Superstores (永輝超市) from DFI Retail's Dairy Farm and Jingdong for HK$6.92 billion, aiming to strengthen its presence in China.

According to its official statement, MINISO said that its wholly-owned subsidiary has entered into the share purchase agreements with the Yonghui Superstores and two units of JD.com, Jingdong Shimao (京東世貿) and Suqian Hanbang (宿遷涵邦), as well as Dairy Farm, an indirectly wholly-owned subsidiary of DFI Retail Group Holdings.

DFI Retail, which was the top shareholder in Yonghui with its 21% stake, said that it had sold its entire stake in Yonghui, which equals 1.91 billion Yonghui shares, netting it gross cash proceeds of around RMB$4.50 billion yuan.

DFI Group said the acquisition aligns with its strategic and capital allocation framework, enabling the group to allocate additional capital to foster the growth of its subsidiary businesses across its markets. 

“The transaction will result in the company receiving gross cash proceeds of approximately RMB$4,496 million upon completion, strengthening the group’s balance sheet and enhancing its capacity to support future growth initiatives for its subsidiary businesses,” the statement reads. 

“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 to the group,” the statement reads.

Meanwhile, Jingdong will be selling 8.3% stake of its entire 11.25% stake in Yonghui to MINISO. 

While MINISO remains optimistic about the development of the offline retail industry in China, the acquisition aligns with its overall strategy and is beneficial to the shareholders as a whole, according to the statement.

It said that Yonghui Superstores is reforming its stores to return to core retail principles, reflecting an inevitable trend in China's supermarket industry aimed at enhancing the shopping experience. This cultural shift aligns closely with MINISO's mission of “Life is for fun.”

Furthermore, MINISO said its experience in developing self-brands, designs, and IP products enables it to support Yonghui Superstores through business collaboration. This partnership will also allow the supermarket chain to leverage MINISO's strengths to create higher-quality self-branded products at lower costs.

Guofu Ye, chairman and CEO, MINISO, said: "I firmly believe that this transaction presents great growth potential for our company and will bring long-term value to our shareholders. With our support and leveraging our expertise in design-led products, Yonghui will be poised to develop higher-quality self-branded products to cater to evolving consumer needs."

"Furthermore, I believe that our collaboration with Yonghui in retail channel upgrade and supply chain will enable us to share resources to further enhance economies of scale, optimise the cost structure and create value for consumers. This transaction will also expand our access to the essential goods sector, allowing us to diversify our business and mitigate cyclical risks," he added.

"Meanwhile, we remain confident in and committed to the growth of our existing business, and will continue to strategically invest in its development and expansion. 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 concluded.

Scott Price, group CEO, DFI Retail Group, said: “We are optimistic about the future of Yonghui and believe that MINISO’s expertise in general merchandise will complement Yonghui’s existing grocery capabilities to support future growth.”

“China is an important market for DFI Retail Group, and we believe this transaction will support our ability to actively expand our subsidiary businesses there. We are proud to serve millions of customers through Mannings China and 7-Eleven and we have ambitious plans to increase the number of 7-Eleven stores in Guangdong Province over coming years,” Price added. 

Don’t miss: MINISO opens world's largest store in Jakarta 

Established in 2013, MINISO is an international product retailer, offering household goods, cosmetics and food at affordable prices. It has opened more than 4,200 stores in over 80 countries and region, according to its official website. Meanwhile, Yonghui Superstores operates around 850 retail stores across over 25 provinces in mainland China. 

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