November 1 -- Fujian New Hua Du Supercenter ( 002264.SZ), a company which manages large shopping malls and supermarkets in Fujian, plans to spend 125 million yuan to fully acquire four foreign subsidiaries of Korea's E-mart, reports dfdaily.com, citing a company filing.

The four enterprises; Ningbo E-mart, Changzhou New World E-mart Development, Taizhou New World Commercial Development, and Hangzhou E-mart Development, had established six hypermarkets in Ningbo, Changzhou, Hangzhou and Taizhou.

The acquisition will enable New Hua Du to control the six hypermarkets, and allow the company to enter into the retail markets of Jiangsu and Zhejiang provinces.

New Hua Du said the acquisition will be funded by internal funds, and payment will be made over three phases, with 20 percent to be paid in the first phase, 30 percent in the second phase, and 50 percent in the final phase.
The proposed transaction is pending approval from shareholders and the Ministry of Commerce.

The four target companies had incurred respective 2010 losses of 28.85 million yuan, 21.83 million yuan, 19.06 million yuan and 4.79 million yuan, on revenues of 90.45 million yuan, 42.55 million yuan, 43.29 million yuan and 115 million yuan.

For the first nine months, except for Hangzhou E-market Development, which recorded a profit of 460,000 yuan, the other companies continued to suffer losses. The Changzhou-based company lost 40.94 million yuan from three of its hypermarkets.

Industry insiders said the acquisitions represents the start of the consolidation trend for the large-scale supermarkets sector, as rising land and labor costs has made it difficult for retail companies with annual sales revenue of three billion yuan to survive.

It is increasingly difficult to find suitable locations for hypermarkets in first and second-tier cities, and most of the good locations are already taken up, added the insiders.

According to an insider, E-mart plans to sell 10 outlets in the Yangtze River region, one of which was located in Beijing and was listed for sale for 200 million yuan.

New Hua Du only acquired the above six outlets which had posted relatively small losses.

Following the disposal of the six outlets, E-mart, still has 21 outlets in China, 12 of which are located in Shanghai.

Shares of New Hua Du fell 0.93 percent to close the morning session at 11.72 yuan today.