Sign In  |  Register  |  About Walnut Creek Guide  |  Contact Us

Walnut Creek, CA
September 01, 2020 1:43pm
7-Day Forecast | Traffic
  • Search Hotels in Walnut Creek Guide

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

GOME Retail Enters into a Framework Agreement with GOME Management to Provide Management Services

HONG KONG, Oct 11, 2021 - (ACN Newswire) - GOME Retail Holdings Limited (HKEX stock code: 493, "GOME" or "the Company", together with its subsidiaries, "the Group") announced today that the Group entered into a Framework Agreement with GOME Management Limited ("GOME Management") which is wholly owned by the controlling shareholder of the Group ("Controlling Shareholder"). The Group will provide management services to five subsidiaries of GOME Management, namely GOME Eco-net Technology Holding Limited ("GOME Home"), Hainan Haisi Enterprise Management Co., Ltd. ("Sharing and Joint Development"), Hainan Beizhi Enterprise Management Co., Ltd. ("Home Decoration"), Rocket Gain Investments Limited ("Anxun Logistics") and Zhongmaixiu (Ningbo) Technology Co., Ltd. ("GOME Collections") (collectively, the "Target Companies") for a period of three years from 1 January 2022 to 31 December 2024.

Pursuant to the Framework Agreement, the Group will provide management services to the Target Companies, including, without limitation, the provision of (i) business management services and training for business management improvement, (ii) training for employees of the Target Companies in relation to management systems, processes, methods and sales skills; (iii) recruitment services of experienced personnel to operate the business; (iv) upon request by the Target Companies, business-related training, assistance and advice, or referral of independent consultants; (v) advice to the Target Companies to develop and improve their business and to provide updated trainings to the Target Companies and their staff from time to time; (vi) advice on the standard business contracts to be used by the Target Companies in the course of business; and (vii) other services as may be agreed between the Target Companies and the Group from time to time.

Pursuant to the Framework Agreement, the Group charges an annual service fee for the provision of management services to each Target Company, which is calculated at a fixed progressive percentage (ranging from 1% to 3.5%) of the consolidated annual operating revenue of the relevant Target Company. Based on the above calculation, the maximum aggregate amount of management fees for three years is up to RMB 2.8 billion. In addition to the annual service fee, the Group will be entitled to receive equity incentive, representing in aggregate up to 10% equity interest in each Target Company as of the due date of the Framework Agreement over the term of the Framework Agreement at nil consideration. Moreover, the Group has also been granted with the option, exercisable in one or more occasions at any time during the three years ending 31 December 2024, to purchase up to 30% equity interest in the relevant Target Company at a valuation representing an agreed percentage discount (ranging from 40% to 50%) of the market valuation of such Target Company at the time of exercise. In the event of any increase in the registered capital of any Target Company or equity transfer of any Target Company to any third party, the Company shall have the right of first refusal.

As a leading home living technology retail service provider in the PRC, with a particular focus on technology, experience, entertainment and socialization, GOME Retail has substantive experience in the management and operation of offline and online retail stores, supply chains, logistics, big data and etc. In the second phase of "Home Living" Strategy, the Group focuses on the retail and home services industries. It has established a new omni-linkage, omni-mode and full-retail business model through innovation of the industry model and technological empowerment of the online and offline platforms as the breakthrough. The Group can satisfy the consumption and service needs of household users in every aspect and allow them to enjoy products and services with better quality at lower cost, through the marketing strategy with entertainment as the core and business strategy with high-quality, low-cost, service and technology as the core. The strategic development direction of the Group is also highly consistent with national policies. As the PRC is shifting its focus on "Common Prosperity" for its current development concept and emphasizing "Dual Circulation" growth on economic strategies and quality development, it becomes clear that the macro policy place more attention to the public livelihood and consumption. This year, related policies such as promoting new consumption, encouraging living convenience and benefiting the people, supporting rural revitalization, and advocating fair competition have been introduced one after another, which has provided a continuous and positive external environment for the Group's current promotion of further implementation of the second phase of the "Home Living" strategy.

In order to build a strategic closed-loop ecosystem and deploy an omni-linkage, omni-mode and full-retail development while avoiding operational risks and future capital investment, etc., the Group has negotiated with the Controlling Shareholder. Both parties agreed to entrust the Group to manage the Target Companies. The Target Companies encompass various home living business areas including the "one store with multiple functions" offline store display, home decoration, home furnishing, logistics and delivery, and wine. The principal businesses of the Target Companies are highly consistent with the Group's "Home Living" strategy and cooperation between the parties is expected to generate a good synergy effect. Firstly, the cooperation between the Target Companies and the Group's business is expected to increase the Group's traffic significantly and bring considerable operating revenue to the Group, realizing a mutual-benefiting distribution model. Secondly, through the entrusted management of the Target Companies, the Group shall be able to optimize its full supply chain, boost its sales significantly and further reduce its costs by grid-based network and digitization through online and offline integration, which in turn benefiting the customers and suppliers, further increasing the number of merchants and members of the Group, and opening up a broader platform and resource network.

The entrustment of management services enables the full connection and integration of systems between GOME Retail and the Target Companies, thus the Group shall be upgraded from a supply chain-driven company to a platform-based company with supply chain capacity, which is advantageous to the surge and optimization of the Group's overall market valuation. Meanwhile, the five Target Companies are in fast-growing industries and are expected to achieve the performance targets. In addition to the service fee, the Group will be also entitled to equity incentive and option to acquire 30% equity interest with the right of first refusal throughout the entrustment period. The above benefits are expected to significantly boost the Group's market valuation. Among others, the Controlling Shareholder has given the Group a relatively large discount based on the valuation of the Target Companies in terms of option, enabling the Group to acquire up to 30% equity interest of the Target Companies at discounted prices, and the opportunity to receive high future yields of the fast-growing industries, as well as to enjoy excess earnings at no cost subject to certain conditions.

In addition, the Framework Agreement is expected to greatly improve the Group's ability to obtain customer traffic at a high efficiency with low cost. The Group and the Target Companies will consolidate and establish a low-cost customer traffic pool via the online "One Page, One Store" model, offline exhibition halls and provision of local life services, etc., hence significantly lowering the Group's costs of attracting traffic as compared to the industry standard. The integration of online and offline platforms enables B-end suppliers to avoid vicious competition caused by unclear position and the expenditure of duplicative and ineffective costs for online and offline platforms, thereby reducing costs and increasing efficiency. As a result, the profits obtained from the saved cost through omni-linkage optimization can be mutual-benefiting among consumers, suppliers and retailers. Looking ahead, GOME Retail will continue to act proactively to forge a new technology retail and consumption service platform to serve the needs of the country, the industry and the public, thus creating greater value for the community and shareholders.





Copyright 2021 ACN Newswire . All rights reserved.
Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 WalnutCreekGuide.com & California Media Partners, LLC. All rights reserved.