LONDON (ShareCast) - (Sharecast News) - Carrefour has agreed to sell an 80% stake in its China business to Chinese retailer Suning.com for €620m.
Carrefour China, which operates 210 hypermarkets and 24 convenience stores, generated net sales of €3.6bn in 2018 and earnings before interest, tax, depreciation and amortisation of €66m.

The French supermarket retailer said "the strong complementarity between Carrefour China and Suning.com's activities will accelerate the development of Carrefour China".

Carrefour will retain a 20% stake in the business and two seats out of seven on the supervisory board.

The deal, which is subject to approval by Chinese competition authorities and other customary conditions, is expected to close by the end of the year. As part of the deal, Carrefour will have the option to sell or Suning.com the option to buy the remaining stake at agreed dates between 2021 and 2027.

At 0830 BST, Carrefour shares were up 2.5% at €17.42.

Bryan Garnier said in in a note that retaining a minority stake is crucial.

"China remains a laboratory for the new retail and Carrefour still has a lot to learn from Chinese customers and from omnichannelised players such as Suning.com. Thus, we believe that keeping a minority stake in the Chinese business is crucial," it said.

"Carrefour follows the partnership approach of Auchan and Metro in China. From this perspective, the disposal of the 20% stake doesn't seem likely to us in the coming years."

It added that the deal will have a positive impact on both the profit & loss and balance sheet for Carrefour as it will allow the group to receive €620m of proceeds and deconsolidate an underperforming unit, "whose chance to recover on its own was very low given the already well developed online in China".

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