Wal-Mart plans to double China stores with $1bn Trust-mart takeover

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Hong Kong, Oct 17: Wal-Mart Stores Inc., stymied this month in its attempt to expand in Japan, plans to double its stores in China by acquiring Trust-Mart for about $1 billion, a person familiar with the proposal said.

Trust-Mart, a closely held chain of grocery and appliance stores, is in talks with Wal-Mart and other overseas companies, said a spokesman, Huang Shiying. A Wal-Mart deal needs regulatory approval and may not be announced for weeks, the person familiar with the proposed acquisition said yesterday, declining to be identified before an announcement.

Expansion in the world's fourth-largest economy may counteract slowing U.S. sales and bolster revenue at Wal-Mart. The retailer's overseas ambitions were thwarted by its midyear withdrawal from Germany and South Korea, and after Japan's Aeon won exclusive rights to acquire the supermarket company Daiei this month.

"This will give them more scale in a market that is going to be increasingly more important for them,'' said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich, with $8.2 billion in assets including Wal-Mart shares.

Wal-Mart initially will purchase 31 stores from Trust-Mart, which controls more than 100 shops, and gradually increase its holdings, according to the Wall Street Journal, which reported the deal earlier. That would give it a bigger foothold in China than French rival Carrefour SA.

Bentonville, Arkansas-based Wal-Mart already runs more than 60 stores in China and has said it plans to open 20 more this year. A spokeswoman for the company, Beth Keck, declined to comment yesterday.

Wal-Mart imported about $18 billion of goods from China last year, making it the country's eighth-largest trading partner, ahead of the UK and Russia. The company had sales of $312.4 billion that year. International revenue grew 11 %, compared with 9.5 % overall.

The retailer lost an opportunity to expand its Seiyu Ltd. unit in Japan earlier this month when Marubeni Corp. chose Aeon to buy stakes in supermarket operators Daiei and Maruetsu Inc., in a deal that may be valued at 75 billion yen ($627 million).

Wal-Mart wants to generate a third of its revenue and profit overseas, compared with a fifth currently. The planned acquisition comes after the company's sale of its German stores in July at a loss of $1 billion and its May exit from South Korea.