MINISO to buy nearly 30% stake in struggling supermarket operator

MINISO Group Holding today announced that it has entered into share purchase agreements with certain shareholders of Yonghui Superstores Co., Ltd (“Yonghui”), to acquire an aggregate of 29.4% of the issued and outstanding shares of Yonghui for a total cash consideration of approximately RMB6.3 billion. Upon the consummation of the transaction, the Company expects to become the largest single shareholder of Yonghui.

Yonghui is a leading retail chain operator in China, listed on the Shanghai Stock Exchange (stock code: 601933) since 2010. It operates approximately 850 supermarkets, offering fresh produce and daily necessities to consumers across China. Yonghui is one of the first distribution enterprises in the PRC to introduce fresh produce into modern supermarkets. In terms of sales scale, it has consistently ranked second among the top 100 supermarkets in the PRC in recent years. In 2023, Yonghui generated approximately RMB78.6 billion in revenue.

The share purchase agreements were entered into between Guangdong Juncai International Trading Co., Ltd., a wholly owned PRC subsidiary of the Company (“Guangdong Juncai”), and the respective sellers. The Dairy Farm Company, Limited, the seller under one of the share purchase agreements, is an indirectly wholly-owned subsidiary of DFI Retail Group Holdings Limited, which is a member of the Jardine Matheson Group. Beijing Jingdong Century Trade Co., Ltd. and Suqian Hanbang Investment Management Co., Ltd., the sellers under the other share purchase agreement, are both indirectly wholly-owned subsidiaries of JD.com, Inc. (NASDAQ Trading Symbol: JD; HKEX Stock Codes: 9618 (HKD counter) and 89618 (RMB counter)).

Pursuant to the share purchase agreements, at the closing of the transaction, Guangdong Juncai will pay to each seller a cash consideration based on a per share price of RMB2.35, which represents a premium of 3.1% to the closing price of Yonghui’s shares on the Shanghai Stock Exchange on September 20, 2024. The Company expects to fund the transaction with a combination of internal financial resources and external financing.

Concurrently with the execution of the share purchase agreements, the Company entered into parent guarantees to guarantee the due performance of Guangdong Juncai of its obligations under the share purchase agreements. Additionally, Mr. Guofu Ye, Chairman, CEO and the controlling shareholder of the Company, has given an irrevocable undertaking to each of the sellers under the share purchase agreements to vote in favor of any resolution approving the transaction at the Company’s shareholder meetings.

Mr. Ye commented, “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, optimize 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.”

“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.” Mr. Ye concluded.

The transaction is subject to customary closing conditions, including obtaining antitrust clearance from the State Administration for Market Regulation of China, securing or completing other necessary regulatory approvals or procedures, as well as receiving the approval of the Company’s shareholders. The Company currently expects the transaction to close in the first half of 2025. Under the share purchase agreements, Guangdong Juncai undertakes to comply with the sell-down restrictions under the applicable laws with respect to the acquired Yonghui shares following the completion of the transaction.