Argos announces Chinese joint venture

RNS Number : 4259Q

Home Retail Group Plc

19 October 2011

 



19 October 2011

Home Retail Group plc

Argos announces Chinese joint venture

Home Retail Group, the UK's leading home and general merchandise retailer, announces today that it has agreed to launch a joint venture company to develop a multi-channel, general merchandise retail business in China with Haier Group, one of the world's leading home appliance manufacturers.

The Argos branded joint venture operation will launch in 2012, targeted at the Shanghai region. The long-term aim is to roll out a multi-channel offer to regions throughout China, leveraging the multi-channel expertise of Home Retail Group together with Haier's extensive distribution capability in China. 

Home Retail Group will have a 49% holding in the joint venture company and the remaining 51% will be held by Haier Electronics Group Co., Ltd.  The Board of Directors of the joint venture company will consist of five directors with three being appointed by Haier Group and two, including the position of Chief Executive, being appointed by Home Retail Group.  It is anticipated that the joint venture will require a total investment of £45m, of which Home Retail Group will provide £22m, payable in three tranches over a two-year period, subject to the satisfaction of agreed performance conditions.  The first tranche, payable by Home Retail Group in 2012, will amount to £10m.

Terry Duddy, Chief Executive of Home Retail Group commented:

"We are delighted to announce the launch of this international expansion for the Argos brand.  Having co-operated with Haier over the last 18 months we are very excited by the opportunity that the combination of our expertise and Haier's capabilities and scale provide to take advantage of the growth potential in China."

Yunjie Zhou, Chief Executive of Haier Electronics Group Co., Ltd added:

"We are very excited to be able to leverage the expertise in multi-channel, general merchandise retailing that Home Retail Group has developed.  With the retail market in China growing strongly over the last few years, we believe that this new business will be well placed to benefit from its continued growth."

Enquiries

Analysts and investors (Home Retail Group)

Richard Ashton                 Finance Director                01908 600291

Don Davis                        Director of Investor Relations

Media (Finsbury)

Rollo Head                                                              020 7251 3801

Certain statements made in this announcement are forward looking statements.  Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements.  Payments referred to above will be required to be paid in US dollars and have been translated using an exchange rate of $1.55 for illustration purposes.

Editors notes:

Home Retail Group

Home Retail Group is the UK's leading home and general merchandise retailer with sales in the last financial year of almost £6 billion.  It sells products under two distinctive and complementary retail brands, Argos and Homebase.  The Group employs some 53,000 people.

Argos is the UK's leading multi-channel retailer and provides a highly successful and unique offer of choice, value and convenience.  It sells more than 35,000 general merchandise products, from over 750 stores throughout the UK and Republic of Ireland, online at www.argos.co.uk, over the telephone and on TV. 

Homebase is a leading home enhancement retailer and is recognised for choice, style and customer service.  It has more than 340 large, out-of-town stores, which sell over 38,000 products, as well as a growing internet offering at www.homebase.co.uk.

Haier Group

Haier Group is one of the world's leading home appliance manufacturers.  It is engaged in the research, development, manufacture and sale of a wide variety of household appliances and consumer electronic goods in China.  Its products are exported to over 100 countries.

Haier Electronics Group Co., Ltd, a subsidiary of Haier Group, is listed on the Hong Kong Stock Exchange.  In addition to manufacturing, it also operates an extensive network across China distributing to around 6,700 franchise stores.

Joint venture parties

The parties to this transaction are:

(1) Home Retail Group (UK) Limited, parent company and guarantor of Home Retail Group (Hong Kong) Limited's obligations 

(2) Home Retail Group (Hong Kong) Limited

(3) Haier Group Corporation, joint parent company of Haier Electronics Group Co., Ltd

(4) Qingdao Haier Investment and Development Co., Ltd, joint parent company of Haier Electronics Group Co., Ltd

(5) Haier Electronics Group Co., Ltd, parent company and guarantor of Foreland Agents Limited's obligations

(6) Foreland Agents Limited

(7) HH Retail Limited, the joint venture company owned 51% by Foreland Agents Limited and 49% by Home Retail Group (Hong Kong) Limited.  HH Retail Limited will own 100% of a Chinese onshore company which will carry on the business of general merchandise multi-channel retailing in China.

 

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