HOME DEPOT TO PURSUE ACQUISITIONS STRATEGY IN CHINA
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Thursday, December 14, 2006
Home Depot, America's second-largest retailer, said it could make more
acquisitions in China following its agreement yesterday to buy HomeWay,
one of China's biggest do-it-yourself chains.
Annette Verschuren, president of Home Depot's Asian operations, said
the company would pursue a similar strategy to the one adopted in
Mexico, where an initial acquisition in 2001 was followed by two
further deals.
"We will grow organically and inorganically as we did in Mexico,"
she said, in an interview.
Home Depot's takeover of HomeWay, reported in the Financial Times
earlier this week, marks the company's entry into China after more than
two years of planning and protracted negotiations. Financial details
were not disclosed but the deal, which gives Home Depot 100 per cent
control of the company, is believed to be worth about $100m.
Also yesterday, GE Aviation signed a $550m agreement with Shanghai
Airlines - including $300m worth of aircraft engines for nine Boeing
787-Dreamliners and $250m worth of related service costs.
The deals, made public at a ceremony in Beijing attended by Carlos
Gutierrez, the US commerce secretary, show how the strengthening
spending power of the Chinese middle-class is fuelling growth in
sectors such as home improvement and travel.
China's home improvement market is already one of the biggest in the
world, currently valued at nearly $50bn and growing by up to a fifth
annually.
Tianjin-based HomeWay commanded 4.4 per cent of the market last year,
making it the fourth-largest DIY chain in China, with 12 stores and
some 3,000 employees across six cities.
Home Depot's biggest competitor in China will be UK-based B&Q, part of
Kingfisher, Europe's largest DIY retailer, which has more than 50
stores and nearly 20 per cent of the market.