10:50 AM EDT, 09/23/2024 (MT Newswires) -- Miniso Group ( MNSO ) on Monday agreed to purchase a stake in Yonghui Superstores to become the largest single shareholder in the Chinese retail chain operator.

The company will acquire a 29.4% interest in Yonghui for about 6.3 billion renminbi ($892.9 million) in cash. Yonghui operates about 850 supermarkets, offering fresh produce and daily necessities to consumers across China. It generated revenue of roughly 78.6 billion renminbi in 2023.

Miniso ( MNSO ) shares listed on the New York stock exchange fell 15% in Monday trading.

The deal involves Miniso ( MNSO ), through its subsidiary Guangdong Juncai International Trading, entering into share purchase agreements with certain investors of Yonghui, including units of DFI Retail Group and JD.com (JD). Under the terms, Guangdong Juncai will pay each selling shareholder 2.35 renminbi per share in cash.

The deal, which requires approval from regulators and Miniso ( MNSO ) shareholders, is expected to complete in the first half of next year. Miniso ( MNSO ) expects to fund the acquisition with a combination of internal financial resources and external financing.

"I firmly believe that this transaction presents great growth potential for our company and will bring long-term value to our shareholders," Miniso ( MNSO ) Chief Executive Guofu Ye said in a statement. "This transaction will also expand our access to the essential goods sector, allowing us to diversify our business and mitigate cyclical risks."

Ye also confirmed Miniso's ( MNSO ) commitment to growing its existing business and to invest in its development and expansion. "We are determined to achieve Miniso's ( MNSO ) five-year development strategy of growing our core business at a compound annual growth rate of no less than 20% over the next five years, excluding the potential impact of this transaction," according to Ye.

Price: 13.90, Change: -2.56, Percent Change: -15.55