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Korean retail giant Shinsegae is to take over Wal-Mart¡¯s Korean operation, the troubled no. 5 in the domestic superstore business.
Shinsegae will buy a 100 percent stake in the U.S. chain¡¯s 16 outlets here for W825 billion (US $825 million) and operate them under the umbrella of its E-Mart retail chain, the company announced Monday. The deal makes Wal Mart, America¡¯s biggest retailer, the second global company to beat a retreat after French retail giant Carrefour sold its 32 South Korean stores in late April to local fashion retailer E-Land. That leaves Tesco (Home Plus), a partnership between the British retailer and its Korean partner run by a Korean CEO, as the only foreign retailer operating in the country. The purchase will give Shinsegae a firm lead over its rivals with 102 stores, 95 in Korea and seven in China.
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Representatives from Shinsegae and Wal-Mart applaud after signing an agreement for the Korean retailer to take over the American chain¡¯s Korean operation, in Seoul on Monday.
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¡°We will run Wal-Mart Korea as an independent entity while retaining all of its jobs and doing our best to maintain business relationships with its current suppliers,¡± Shinsegae CEO Koo Hak-su said in a joint press briefing with Wal-Mart on Monday. ¡°We can fully pay for the takeover with money we borrow, since our credit is good enough, and the loans can be repaid within two years.¡±
There was no open bidding for the takeover. ¡°After Wal-Mart suggested selling its Korean units to us last March, we started negotiations behind the scenes,¡± Koo said. ¡°We were able to reach agreement quickly as Wal-Mart wanted to protect its reputation in Korea, employment security for its Korean staff and business relationships with its partners rather than the selling price, and that was also what we wanted.¡±
Wal-Mart has some 6,100 stores around the world which produce W323 trillion in sales. It entered the Korean market in 1998 but has had a difficult time finding a foothold and posted W9.9 trillion of losses last year.
Shinsegae shares jumped 6.6 percent to close at W460,000 amid a sharp drop of other issues on Monday. Shares of Lotte Shopping, its rival company, slid 4.62 percent to close at W361,500.
(englishnews@chosun.com )
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