Two Leading Retail Pioneers, A.S. Watson Group & Yonghui, and the World-Leading Internet Service Company, Tencent, Announce a Joint Venture to Create the Largest Grocery Retailer in Guangdong

• A.S. Watson Group, Yonghui and Tencent are pleased to announce the formation of a 40:50:10 joint venture to create the largest grocery retail business in Guangdong, China.
• A.S. Watson Group and Yonghui will each inject their respective existing grocery retail operations in Guangdong into the joint venture.
• Yonghui Superstores is a booming Chinese Hi-Tech Retailing with strong national and local sourcing capabilities, and a wealth of knowledge in the O2O retail model.
• A.S. Watson Group’s supermarket brand PARKnSHOP in Guangdong is a leading player in the province with a wide store network, strong brand equity and customer loyalty.
• Tencent brings additional technology and big data analytical capabilities to enable the power of the new joint-venture company to be unlocked to gain further leadership in Guangdong.

A.S. Watson Group (ASW), the retail arm of CK Hutchison Holdings Limited(0001.HK), Yonghui Superstores Co Ltd. (601933.SS) and Tencent Holdings Ltd. (0700.HK) today jointly announced the agreement to form a joint venture to redefine grocery retail in Guangdong, China.
The joint venture combines ASW’s current PARKnSHOP China supermarket asset with Yonghui’s portfolio in Guangdong to give a store network of over 70 stores and 2.2 million loyalty member base. PARKnSHOP has operated in the Guangdong Province for 34 years and brings an extensive store network and brand recognition, whilst Yonghui’s stores are experiencing strong growth through their innovative pursuits. The objective of the partnership is to capitalise on the complementary strengths of both companies to accelerate growth and expand the business.
Guangdong located in Southern China, Guangdong has a 110 million population, accounting for 8% of the country’s population. Guangdong province’s retail sales has shown strong nominal growth at +16.1% (+10.5% after price adjustment) for the first eight months of 2018, according to the Guangdong Bureau of Statistics. The joint venture hopes to capture the growth in Guangdong-Hong Kong-Macao Greater Bay Area
Mr Dominic Lai, Group Managing Director of A.S. Watson Group commented, “A.S. Watson Group is delighted and extremely excited about this partnership which brings together Yonghui, one of the largest and most successful national supermarket chain and PARKnSHOP, a well-known brand in Hong Kong and Southern China.”
“We have been looking at ways to accelerate our expansion and there is no better partner than Yonghui to achieve that mission. I am very excited about this joint venture which enables us to combine the power of two retail brand, thus giving birth to a powerful contender in grocery retail in Southern China to the ultimate benefits of consumers.”
“The investment of Tencent creates additional strategic importance to this new brand, which we will name “PARKnSHOP Yonghui”.
Mr Zhang Xuanning, Founder of Yonghui Superstores, said, “Guangdong is one of the most important growth markets in Mainland China and we are honoured to team up with such a strong partner as PARKnSHOP to help accelerate our penetration and customer acquisition.”

Ms Tian Jiangxue, Deputy General Manager of Tencent Smart Retail,said, “We believe the collaboration with A.S. Watson Group and Yonghui will enable us to explore opportunities in the regional market. As a leader in tech and innovation in the Guangdong-Hong Kong-Macao Greater Bay Area, Tencent will spare no efforts in fueling the digital transformation of the joint venture, sharpening its edge in the big data and cloud-computing era.”

Goldman Sachs and CITIC Securities acted as financial advisors to A.S. Watson Group and Yonghui, respectively in this transaction.
For details of the transaction please refer to the announcement on the website of Shanghai Stock Exchange: