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Dairy Farm buys more Yonghui shares

Dairy Farm International has agreed to acquire a further 143 million shares in a placement by Yonghui Superstores for about US$210 million.

The investment by DFCL is being made in conjunction with acquiring a 10 per cent interest for consideration of about US$700 million and protects Dairy Farm’s existing 19.99 per cent stake.

Zhang Xuansong, Yonghui’s chairman, is acquiring a two per cent interest in the enlarged share capital in the placement for US$140 million, and his brother, Zhang Xuanning, the deputy chairman of Yonghui, will between them hold a reduced 29.15 per cent interest.

Dairy Farm Group CEO Graham Allan, said his company was pleased to support Yonghui and its leadership team with the transaction.

“The co-operation with will accelerate Yonghui’s participation in the rapidly expanding

eCommerce space in China and offer significant opportunities for Yonghui. The related capital raising will strengthen Yonghui further as it implements its store development plans, builds a leading food supply chain in China and invests in an integrated online-to-offline business model.”

The placement to requires the approval of Yonghui’s shareholders and certain regulatory approvals in the PRC which will take up to six months to complete.

Shanghai-listed Yonghui operates hypermarkets and supermarkets from its Fuzhou, Fujian province, headquarters and operates 351 retail outlets across 17 provinces in China.

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