On June 23, 2019, Carrefour announced that it had agreed to sell an 80% stake in Carrefour China to Chinese group Suning.com for €620 million (¥4.8 billion) in cash. The transaction values Carrefour China at an equity value of €774 million (¥6.0 billion) and an enterprise value of €1.4 billion.  Carrefour will retain a 20% stake in the business and two seats out of the seven on Carrefour China’s Supervisory Board. Carrefour China generated net sales of €3.6 billion (¥28.5 billion) in 2018, with comparable sales down 5.9% in the year. The operation generated a recurring operating loss of €32 million (¥253 million) in 2018, easing from a loss of €82 million (¥546 million) in 2017. Carrefour China operates a network of 210 hypermarkets and 24 convenience stores.  Suning.com operates a network of over 8,881 stores in more than 700 cities; Carrefour’s press release stated that Suning.com operates the country’s third-largest B2C e-commerce platform. Carrefour’s effective exit from China follows recent activity from other international retailers in the market: 

• Amazon announced plans to close its China domestic marketplace in July.
• Earlier this month, Aldi opened its first stores in China. 

Carrefour is overhauling its global operations through a five-year transformation plan called “Carrefour 2022.” Under this plan, the company is cutting costs, which includes downsizing its headquarters in countries across the globe; disposing of nonstrategic real estate assets worth €500 million; and investing around €2 billion annually to improve its price competitiveness and productivity. The company plans to open 2,000 convenience stores in five years. And, it has targets to grow online food sales as well as sales of fresh food, organic products and private-label goods.  The new agreement provides Carrefour with options to sell the remaining 20% stake to Suning.com:

• In a 90-day window following the second anniversary of the transaction closing, Carrefour will have the right to sell the remaining 20% to Suning.com at a price equal to 20% of the equity value determined at closing for the sale of the 80% stake.
• After this window, for a further 90-day period, Suning.com will have the right to buy Carrefour’s 20% stake at a price equal to 20% of the equity value determined at closing for the sale of the 80% stake.
• After the third anniversary of the transaction closing, and for a period of three years, Carrefour will have the right to sell its remaining 20% stake to Suning.com, at fair market value. 
• After the fourth anniversary of the transaction closing, and for a period of three years, Suning.com will have the right to buy Carrefour’s residual 20% stake, at fair market value.

Closing of the transaction is subject to approval by Chinese competition authorities, and is expected by the end of 2019.