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Argos announces Chinese joint venture

Home Retail Group, the UK’s leading home and general merchandise retailer, announces today that it has agreed to launch a joint venture company to develop a multi-channel, general merchandise retail business in China with Haier Group, one of the world’s leading home appliance manufacturers.

The Argos branded joint venture operation will launch in 2012, targeted at the Shanghai region. The long-term aim is to roll out a multi-channel offer to regions throughout China, leveraging the multi-channel expertise of Home Retail Group together with Haier’s extensive distribution capability in China.

Home Retail Group will have a 49% holding in the joint venture company and the remaining 51% will be held by Haier Electronics Group Co., Ltd. The Board of Directors of the joint venture company will consist of five directors with three being appointed by Haier Group and two, including the position of Chief Executive, being appointed by Home Retail Group.

It is anticipated that the joint venture will require a total investment of £45m, of which Home Retail Group will provide £22m, payable in three tranches over a two-year period, subject to the satisfaction of agreed performance conditions. The first tranche, payable by Home Retail Group in 2012, will amount to £10m.

Terry Duddy, Chief Executive of Home Retail Group commented:
“We are delighted to announce the launch of this international expansion for the Argos brand. Having cooperated with Haier over the last 18 months we are very excited by the opportunity that the combination of our expertise and Haier’s capabilities and scale provide to take advantage of the growth potential in China.”

Yunjie Zhou, Chief Executive of Haier Electronics Group Co., Ltd added: “We are very excited to be able to leverage the expertise in multi-channel, general merchandise retailing that Home Retail Group has developed. With the retail market in China growing strongly over the last few years, we believe that this new business will be well placed to benefit from its continued growth.”

Source: HRG Press Release

19 October 2011
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