Appliance and consumer electronics retailer Best Buy Co., Inc. agreed to acquire a majority interest in Jiangsu Five Star Appliance Co., Ltd., China's fourth-largest appliance and consumer electronics retailer.
According to Best Buy, the transaction will provide it with an immediate retail presence in China through Five Star's 136 stores in eight of China's 34 provinces. The transaction received the necessary Chinese government regulatory approvals, including a business license that was granted on May 11, 2006, and is expected to close in June 2006.
Upon closing, Best Buy will hold a majority ownership interest in Five Star for an investment of U.S. $180 million. The remaining interests in Five Star will continue to be owned by its current employees and management team.
Five Star has more than 12,000 company employees, and headquarters in Nanjing, Jiangsu. Five Star's current management team, including the company's founder, will remain with the company and the stores will operate under the current brand. Five Star's 2005 revenue was nearly $700 million, an increase of more than 50 percent from the prior year. Five Star's most significant product categories include air-conditioning, video and audio products, appliances, and digital communication devices.
Best Buy said consumer electronics sales in China are projected to be nearly $100 billion in 2010 and are projected to grow in the double digits for the next decade.
"Best Buy is pleased to be entering China's retail market with Five Star's management team as our partners. We are very encouraged by the relationships that have already been forged between our two companies," said Robert Willett, CEO of Best Buy International. "This relationship complements our other efforts to learn about the Chinese retail environment. In addition to our new work with Five Star, we are moving forward with our plans to open our first Best Buy retail store in China this year."
to Daily News