Wal-Mart Yihaodian Acquisition Gets Conditional Approval

Deal Would Give It 51% Stake in Online Retailer, in Aim to Boost Revenue in China

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Wal-Mart Stores received conditional approval from Chinese regulators to acquire a majority stake in online retailer Yihaodian as it works to expand on the internet and in emerging markets.

China's Ministry of Commerce approved the deal, subject to certain other regulatory conditions, Wal-Mart said yesterday in an e-mailed statement. The deal would give Wal-Mart a 51% stake in Yihaodian, up from 18% now.

The world's largest retailer is working to reverse declining traffic at its Chinese operations and has had difficulty increasing online sales. The Yihaodian acquisition may help expand internet revenue in China faster, said Bryan Gildenberg, an analyst with London-based research firm Kantar Retail.

"Wal-Mart is buying the closest thing to an online distribution business in China," Mr. Gildenberg said in a telephone interview. "They get a purpose-built e-commerce infrastructure."

The retailer currently has distribution centers that are set up to ship goods to its stores in China. Yihaodian's distribution centers can pick items and ship them to individual consumers, Mr. Gildenberg said.

Wal-Mart has been acquiring e-commerce companies for the past year to bolster its online presence both in the U.S. and globally. The company formed its @WalmartLabs unit in San Bruno, Calif., last year by acquiring social-media firm Kosmix and several others.

At the same time, Wal-Mart has been struggling to improve operations in China. At a presentation to reporters in May, Wal-Mart International President and CEO Doug McMillon said he was trying to make sure the company's stores in China had the right mix of products and the best layout to lure customers.

McMillon also said Wal-Mart plans to roll out its everyday low-price strategy there later this year. Currently, the company uses sales and promotions in China as other retailers do.

Yihaodian said in a statement obtained by Ad Age : "Yihaodian aims to provide the best customer experience in the industry and has maintained consistently high growth rates every year since its founding in 2008. With this deepening of the Yihaodian-Walmart partnership, Yihaodian looks forward to delivering greater value to even more customers."

~Bloomberg News~
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