Step by step high mergers and acquisitions Nancheng department store matchmaker five years of never abandon

Absrtact: Our reporter Pan Shanghai report Step by step High (002251), Nancheng department stores, with the creation of Albert because of the step-by-step high wholly-owned purchase of the South City department store plan, but tightly linked together. In the consumer recession and the impact of the retail industry by the capital market in the cold big background of the newspaper reporter Pan Shanghai


Step by Step (002251), Nancheng department stores, with the creation of Albert-because of the step-by-step high wholly-owned purchase of the Nancheng Department of the plan, but tightly linked together.





in the context of the market being left out by the retail sector, which is hit by a consumer slump and the electricity business, a booming retail industry that hopes to expand rapidly through mergers and acquisitions, along with another regional department store tycoon who has dropped out of the market, looms behind a PE.





This sounds quite logical story, also get the recognition of the capital market. Step by step high mergers and acquisitions on May 12 for the first time announced, the day step by step high stock price closed at 14.37 Yuan, close to trading. But a retail analyst believes that the purchase of the other is good, there is a problem: "The price is too expensive."





Nancheng Department Store (full name "Guangxi Nancheng Department Store Co., Ltd.") 2013 operating income and net profit of about 3.1 billion yuan and 100 million yuan respectively, the net profit of 2014 is expected to be 110 million yuan, step by step high plan to pay about 1.6 billion yuan to buy the South Nancheng department store 100% of the equity. At present, the average value of retail enterprises in A shares is less than 20 times times. So the valuation of this single transaction is not low.





However, step by step high starting from 2009 with Nancheng department stores, during which Nancheng department store experienced the first sprint listing, was no, again listed, step by step tall shareholder and chairman Wang filled with Nancheng department store's major shareholder and chairman Zhong Yongli "flirting". Until the step-by-step high to the Securities and Futures Commission to report the transaction material, Nancheng department stores to the CSRC to withdraw the reported materials.





21st Century economic reporting reporter exclusive interview with Wang Fill, Zhong Yongli, with the creation of Albert (full name "Shenzhen Albert Venture Capital Co., Ltd.") Chairman Zheng Weihe to restore the original transaction.





five years in vain?





Wang filled with Zhong Yongli, to date back to the 2009, their referral is Zheng Weihe.





In the 2006, Zheng Weihe in contact with the high step, so he met the King fill. Although, at that time Zheng Weihe did not buy a stake in the high step, and missed two years after the step-by-step high listing feast, but because he and Wang Fill, and Mrs. Wong Zhang Haixia (step high director) with the Ceibs Business school students, and maintain a good friendship.





December 2007, the South China Sea Growth Fund (full name "Shenzhen South China Sea Growth venture Capital partnership"), managed by Albert, was 7.5% per cent of the Zhong Yongli's Nancheng department store. Soon thereafter, Nancheng department stores began to do joint-stock reform, preparations for the listing.





from 2009, is also a step by step high on the market beginning of the second year, Wang filled in the consideration of mergers and acquisitions in the way to expand, he through Zheng Weihe know Zhong Yongli after, on the South City department store has a unique clock: "We are very close to the geographical, like our Yongzhou in Hunan Province opened the store, on the border with Guangxi, the industry is very similar, the main supermarket , run home appliances and department stores, so the cost of integration is not so high. ”





But at this time Zhong Yongli for the listing also complacent. He and Wang fill also quite speculator, two enterprises in addition to sales category of similar, "Our two enterprises DNA is very similar, have a certain brand and scale advantage." "So, in the face of the king's acquisition invitation, the Bell's answer is" when we go to the city to talk.





2011, Nancheng department store to China Securities Regulatory Commission to submit a listing application, but was not. Zhong Yongli recalls this paragraph, explained that "my younger brother Zhong Yongta in Jiangxi and Shenzhen are also doing retail, the name is" Yongan Nancheng department store ". The SFC believes there is competition among brothers.





but Zhong Yongli did not give up the heart of the listing, he persuaded his brother Zhong Yongta will wing Annan City department store sold. Zhong Yongta also obeyed his advice. 2012, Nancheng department store to Zhong Yongta, after the expansion of shares, Zhong YONGTA owned Nancheng department store 2.44% of the equity.





2013, Nancheng department store again submitted to the listing application, began the long line of listing.




During this period, Wang
and Zhong Yongli met several times a year to exchange views on the industry. They also visit each other's businesses, and executives from two of companies also have dealings with each other. In the past two years, the two people's topic, nature into the impact of the traditional retail business, the future of the industry.





In the end, the two people reached a high level of consensus: "First, the future of retail industry is not a simple online or offline, but online at the same time to do; second, the need to highlight the advantages of localization." "And step by step high electric business strategy, it is" to the localization of the supply chain, low-cost and efficient to meet the needs of local consumers online under the line.





2014, step by step high and Nancheng department store after a long "love long-distance", issued a plan of cooperation between the two sides: Step by step high issue of about 1.5 billion yuan of shares, the acquisition of Zhong Yongli, South China Sea Growth Fund (with the creation of the fund), Zhong YONGTA, etc. hold 95% of the South China Sea To the South China Sea Growth Fund to pay 79 million yuan to buy the remaining 5% of the shares.





If the deal is approved by the SFC, the future Zhong Yongli will hold a step by 83 million shares, more than Zhang Haixia 71 million shares, become the second largest shareholder.





Wang said, "2009 we talked to Nancheng very thoroughly, close to the talks." The price of the talk was very close to the current price. Five years ago, Nancheng department stores less than 2 billion of sales revenue, 2013 is 3.1 billion. But we talked about the same price. At that time the industry valuation is high, today's capital market is expected to impact on our industry. The clock joked about five years of vain. At that time, capital markets were valuing the retail sector by nearly 30 times times, now less than 20 times times. I say, step by step high market value, five years ago the highest point and now is similar. My profit rose from more than 100 million to more than 400 million, with sales exceeding 10 billion. You're in vain. The capital market is so full of change. ”





public data show that, in 2013, the operating income and net profit were 11.4 billion yuan and 415 million yuan respectively.





in any case, with the creation of Albert can be part of the present, this is a long five years of love behind the winner of long-distance running.





"Cooperative" logic





Wang Fill and Zhong Yongli "for no money", behind the reasons, both macro-depressed background, consumption of the recession, and the impact of the electric business, the Chinese department store industry's deep suffering. And Zhong Yongli has firmly to go public, now choose and step by step high swap shares, the same reason.





Zhong Yongli was born in 1964, is the year of Providence, he entered the retail industry from 1995, has nearly 20 years of experience. Nancheng department stores in Guangxi and Yunnan have a total of 38 branches for the Guangxi provincial retail industry leader. In the past few years, there have been a number of larger retail companies, including foreign companies, to give him an olive branch, most of the scheme for the full cash acquisition. That means he can sell the business. But he finally accepted a step-by-step swap, because he thought supermarkets could still do it: "It is impossible to replace all physical stores, many of which are online replacements." ”





Zhong Yongli has been concerned about the electrical business, but also concerned about the pace of the high electrical business exploration. He said he would start his own electricity business next year if he did not go on a smooth listing with a step-by-step cooperation.





and eventually he chose to work with backgammon because he saw: on the one hand, step by step high with a foreign-funded team of DNA management five years later, software systems, IT systems, human resources management systems are relatively advanced and perfect; "I analyzed why its size and profitability grew so well that it had a relationship with its management." On the other hand, step by step high first in the field of electric business exploration, and Zhong Yongli also recognized Wang fill the electric business strategy. He thought: "If step by step high into Guangxi, will be a strong competitor; As such, it is better to choose to work together with each other, to turn competitors into partners, and their advanced management experience and electrical business attempts, which are shared by us, can shorten the time of 3-5 years and achieve the desired goal. ”





Zhong Yongli says many entrepreneurs have the traditional idea of "better to be the head of the chickens," but now it would be fatal to have that idea. "If it's better to work with a step-by-step partnership, why go into that cul-de-sac?" Do 4 billion (sales) of the eldest, or do 20 billion (sales) of the penis? This is a strategic issue and I think that choice is more important than effort. ”





before, step by step high already started to carry out electric quotient, delivery within 10 hours. In short, step by step High has the city of the store, the customer in the day before 12 o'clock noon orders, then goods on the day of delivery, if the order after this, the next day sent.





"We started July 1 to push the" one hour Arrival ", which is to tie our mobile end online. As long as we are the city of high step store, customers use mobile phone orders, the main urban area can be delivered within one hours. ”





Wang explained that the time difference between the two, is because the current step by step high electric dealer, is the central warehouse unified delivery distribution, the so-called "central warehouse" is the big warehouse in each province, it takes 10 hours. and step by step high it and distribution system is ready, the future of "one hour delivery" strategy, is to each big store as the front-end logistics center, by the big store delivery. This is equivalent to "Send the city", so you can do one hours to arrive. Wang stressed that in doing so, the cost of distribution is only 1%-2% higher than before.





This is Wang filling push, Zhong Yongli approved, "with local supply chain, in a low-cost and efficient way to meet local demand." "Their response to the aggressive national-type electric dealer strategy is to integrate the local line."





In addition, Wang filled out clearly that the future of the step-by-step and Nancheng department stores will certainly share the supply chain and distribution system, but this is not a rush, integration will be slowly. In the future, the pace will continue to expand through mergers and acquisitions, because "throughout the world, FMCG retail industry will certainly appear big group." If you do not have the ability to bargain (determine the price), you will not be able to make money, so be sure to have scale.





Capital Senior Partner Shen JINGWU Analysis: "From the point of view of others, step by step high purchase Nancheng department stores, is more reliable mergers and acquisitions." Everyone's industry similar, geographical complementarity, in the management capacity, step by step with advanced ideas can be shared. and step by step high scale is significantly larger than Nancheng department stores, which is also conducive to integration. Whether the two sides can finally achieve the effect of 1+1>2, then see if the high step can retain the original excellent team Nancheng department store, but also with the advanced concept of step-by-step will be upgraded to Nancheng department stores, as well as the effective integration of the two sides of the culture. ”





Shen Jingwu that, due to the weak consumer market and the impact of the Internet, some regional leading retail enterprises are facing some difficulties, its own growth is limited, independent listing is quite uncertain, the capital market is not high valuation, and regional retail enterprises to develop across the province, but also quite difficult. At this time for the excellent national retail enterprises is a good opportunity, "now open new stores less competitors, bargaining power; strategic mergers and acquisitions are much more marked and prices are not too expensive, but the weaker or only regional retail enterprises must consider the exit approach pragmatically." ”





Author: Pan Wei