Shares of Miniso (NYSE) fell in premarket trading after the Chinese retailer announced plans to buy a 29.4% stake in Yonghui Superstores for 6.3 billion yuan ($893.1 million) from JD.com and DFI Retail Group. The purchase, priced at 2.35 yuan per share, represents a 3.1% premium over Yonghui’s recent closing price.
Yonghui, which has faced three consecutive years of net losses due to store closures, has been struggling amidst China’s uncertain economic climate and weak domestic consumption.
The deal makes Miniso the largest shareholder in Yonghui, but analysts from Bank of America expressed concerns, downgrading Miniso’s stock to “Underperform.” They questioned the strategic synergies between Miniso, a lifestyle goods retailer, and Yonghui, a food and beverage seller, stating that the transaction increases Miniso’s risk profile and raises uncertainties about the benefits of the investment.