Mergers, Acquisitions and Takeovers Case Study

Wal-Mart’s Bid for Trust-Mart: Consolidating Presence in China

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Abstract:

Wal-Mart Stores Inc. was bidding $1 billion for a chain of 100 hypermarkets owned by Trust-mart, a Taiwanese retailer operating in China. The deal had the potential to make Wal-Mart ahead of its competitors in China to become the country’s biggest food and department store network. Wal-Mart cited the reason of familiarity of Chinese people with the transaction of these hypermarkets, to support the acquisition. With China’s economy growing more than 10% a year, the retail market was booming in 2006. Retail sales surged 12.9 percent in 2005 over the year before, to 6.7 trillion Yuan ($847 billion). By 2020, industry forecasts said the market could expand to about $2.4 trillion. In this juncture analysts thought that such a deal would certainly help Wal-Mart to consolidate in China. It also helped the company to being ahead of other companies like, Carrefour SA of France, which earlier had more number of hypermarkets in China.

This case will focus on why world’s largest retailer is so keen to make the deal into a reality and how Wal-Mart could get strategic advantages from this deal, what are the problems associated with the deal and how Wal-Mart plans to over come it.

Pedagogical Objectives:

• To discuss about the Chinese retail market
• To discuss about Wal-Mart’s bid for Trust Mart
• To analyse the probable synergies between Wal-Mart and Trust Mart.

Keywords : Mergers,Acquisitions,Alliances Case Study;Wal-Mart; Trust-Mart; China; Retail chain; Hypermarkets; Acquisition; Carrefour; Chinese retail market; Sam's Club; Strategic rationale; Reputation crisis; Food and department store; Deal; Consolidation; State Economic and Trade Commission (SETC)

Contents : 
Chinese Retail Market: A Snapshot
Wal-Mart’s Bid For Trust- Mart
Very Keen Wal-Mart to Finalize the Deal
Wal-Mart – Trust-Mart: A Marriage Made in Heaven?
Wal-Mart’s financial highlights for the last Five Years
Wal-Mart International/Worldwide
Growth Strategy of Wal-Mart in China at a Glance