China's Tencent plans retail push with Yonghui Superstores stake

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Chinese tech giant Tencent Holdings Ltd. plans to buy a five percent stake in Yonghui Superstores Co Ltd, the department store operator said on Monday, in the latest push by China’s Internet giants into offline retail.

The investment, which will be made through Tencent affiliate Linzhi Tencent Technology, will also see the firm take a 15 percent stake in Yonghui’s supply chain and logistics subsidiary via a capital increase, the retailer said.

The deal follows a major push by Tencent rival Alibaba Group Holding Ltd into brick-and-mortar retail, including taking a 2.9-billion-US-dollar stake in top Chinese grocery chain Sun Art Retail Group last month.

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Details of the deal, including price and stake sellers, remain under discussion, Yonghui added in a filing to the Shanghai bourse. Yonghui’s market cap was 93.6 billion yuan (14.14 billion US dollars) when its shares were suspended on Friday.

Tencent was not immediately available for comment outside of normal business hours.

Trading in Yonghui’s stock will remain suspended after being halted on Friday when the firm’s shares jumped the daily limit of 10 percent on media reports of Tencent’s investment.

The move by Tencent takes it into closer competition with rival Alibaba, which is looking to extend its grip over online commerce into physical stores. In China, 85 percent of retail sales are still made offline.

In the past couple of years, Alibaba has spent over 10 billion US dollars for major stakes in big-box retailer Suning Commerce Group, Lianhua Supermarket Holdings and Intime Retail Group.

Yonghui, founded in 2001, says it has close to 600 supermarkets across China. The firm’s major investors include Dairy Farm Group, part of conglomerate Jardine Matheson Group.

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Source(s): Reuters