(Yicai Global) Dec. 14 -- The eight-year concerted action between Yonghui Superstores' founding Zhang brothers has ended over differences in opinion. The market value of the retail giant is CNY75 billion (USD10.9 billion).
The Fuzhou, Fujian province-based retailer plans to buy 1.5 percent shares in Dalian Wanda Commercial Management Group at CNY3.5 billion and sell its 20 percent stake in Yonghui Yunchuang Technology to Zhang Xuanning, the firm's vice chairman, for CNY393 million (USD57 million), and the firm will no longer be included in the firm's consolidated financial statements, the company said in three straight blockbuster statements late Dec. 4.
Yonghui Superstores' brother founders Zhang Xuansong and Zhang Xuanning terminated their concerted action agreement and the firm will have no controlling shareholder and actual controller, per their statements.
Yonghui Superstores' largest shareholder Dairy Farm International Holdings is a Hong Kong-based retailer that holds a 19.9 percent share, while Zhang Xuansong and Zhang Xuanning hold 14.7 percent and 7.7 percent, respectively, Beijing-based e-commerce JD.Com and its affiliates hold 11.43 percent, and Shenzhen-headquartered tech titan Tencent Holdings holds 5 percent.
The Zhang brothers ended their alliance because they disagree over the firm's development direction and strategies, organization and governance mechanism, as well as Yonghui Yunchuang Technology's positioning and development direction and approaches, Yonghui Superstores further disclosed yesterday.
Zhang Xuansong and Zhang Xuanning signed a shareholders' agreement on March 10, 2010, which they renewed for three years on Dec. 14, 2013. That agreement expired in December 2016 and they have not renewed it since because of their disagreement.
Zhang Xuansong is the firm's chairman and Zhang Xuanning is vice chairman. The company is likely to have a rotating chairman based on its corporate governance documents because it will have no controlling shareholder and no actual controller. The rotating chairman's term of office is up to one year, but each can be reelected afterwards.
Yonghui Yunchuang Technology has Super Species, a new retail model combining supermarkets, catering and online-to-offline services, Yonghui Life (an app), Yonghui Private Kitchen (a catering service) and other businesses.
Yonghui Yunchuang Technology is an online business that has aroused great market expectations. Tencent participated in its capital increase in January, contributing CNY956 million to become its second-largest shareholder with a 15 percent stake. Yonghui Superstores' investment in Yonghui Yunchuang Technology totals CNY582.5 million, making up 46.6 percent of its shares.
Yonghui Superstores plans to transfer a 20 percent stake in Yonghui Yunchuang Technology to Zhang Xuanning. After the transfer, Zhang Xuanning will become Yonghui Yunchuang Technology's largest shareholder with his proportion rising to 29.6 percent from 9.6 percent; Yonghui Superstores will be the second-largest, with its slice shrinking to 26.6 percent from 46.6 percent, while Tencent will be third-largest.
"I disagree with Chief Executive Zhang Xuanning about Super Species. He prefers offline catering, but I focus on online sales and door-to-door delivery," Zhang Xuansong said at a shareholders' meeting in June, per media reports.
The discord between Yonghui Superstores' major shareholders has not spooked the market, however. Yonghui Superstores' stock [SHA:601933] price jumped about 4 percent from Dec. 5 to today.
Editor: Ben Armour