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Wal-Mart to Buy Chinese Retail Chain

Posted on: Tuesday, 17 October 2006, 00:00 CDT

BEIJING - Wal-Mart Stores Inc. will pay about $1 billion to buy a chain of 100 hypermarkets in China in a deal that could vault it ahead of competitors to become the country's biggest food and department store network, a news report said Tuesday.

Wal-Mart plans to buy the hypermarkets from Trust-Mart, a Taiwanese company, The Asian Wall Street Journal said, citing people familiar with the transaction. The Financial Times, citing people close to the negotiations, said Wal-Mart had emerged as the leading bidder for the chain but said no agreement had been reached.

"We don't have any comment on any of this market speculation," said Jonathan Dong, a spokesman for Wal-Mart China.

Calls to Shanghai Trust-Mart Co. rang unanswered Tuesday morning local time.

Foreign retailers are trying to tap China's fast-growing economy, large population and expanding middle class.

The Wal-Mart deal, if completed, would follow the Bentonville, Arkansas-based company's recent exit from both Germany and South Korea.

A hypermarket combines a supermarket and a department store in a giant facility with a full line of groceries and general merchandise.

Such a deal would vault Wal-Mart past its rival, Carrefour SA of France, in the number of hypermarkets in China.

Wal-Mart beat out Carrefour for the Trust-Mart purchase, the Journal said, citing people involved in the deal.

Wal-Mart has 66 stores in China and says it plans to increase in size fivefold in the next five years.

The transaction is structured to take place in phases, with Wal-Mart acquiring 31 stores initially, the Journal reported.

It said Wal-Mart will acquire the remainder of Trust-Mart's 100 stores over the next three years as each outlet meets various criteria, including compliance with fire codes.

Details of the payment were not reported.

Source: Associated Press/AP Online

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