Carrefour Selling Korea Unit

SEOUL-Eland, a locally based clothing-maker and distribution group, has agreed to acquire the Korea unit of French retailing giant Carrefour for $1.88 billion (euros 1.5 billion; won 1.75 trillion). Carrefour Korea operates 32 hypermarkets and 24 shopping malls attached to those hypermarkets.

Founded in 1980, E-Land is a leading Korean fashion retail group which operates fashion outlets, department stores and hypermarkets. It had ex VAT sales of euros 1.55 billion in 2004, according to published reports. Carrefour’s South Korea ex VAT sales for 2005 were euros 1.42 billion; net profit was less than half what it was in 2004, according to published reports.

Carrefour says the divestment of its Korea unit is part of a larger effort to withdraw from activities that are either non-core or not profitable enough. The company is reportedly shifting its focus to China. The sale of Carrefour Korea is subject to the approval of Korean Competition authorities, among others.

Carrefour opened its first South Korea store in 1996. It has invested a total of $1.6 billion in the country but has been unable to parlay that into a leading position in the country. Eland financed the acquisition by partnering with South Korea’s Kookmin Bank and Woori Bank.

Lotte Shopping also was interested in acquiring Carrefour’s Korea portfolio, according to previously published reports coming out of Korea, as were the Samsung Tesco Homeplus joint venture and E-Mart, an affiliate of department store chain Shinsegae.

Eland says it will guarantee all 6,000 jobs associated with Carrefour Korea and existing supplier commitments. Carrefour says those items were among the factors considered in selecting a buyer.