Paul Weiss, Baker McKenzie Handle $2B Chinese Retail Deal

Paul, Weiss, Rifkind, Wharton & Garrison and Baker McKenzie have the lead roles on a $2.1 billion retail deal in China.

Beijing-based Wumei Technology Group, which operates the Wumart supermarket chain in China, is acquiring German wholesaler Metro AG's 23-year-old Chinese operations, Metro China, at an enterprise value of $2.1 billion. The German company will also receive a 20% stake in the newly created joint venture between Metro China and Wumei. The transaction is expected to be completed by the second quarter of next year, following Chinese government and regulatory approvals.

Paul Weiss Hong Kong partner Betty Yap is advising Wumei. German firm Noerr partners Alexander Hirsch in Düsseldorf, Till Kosche in Frankfurt and Tibor Fedke in Berlin are serving as German counsel. JunHe is serving as Chinese counsel to Beijing-based Wumei.

Baker McKenzie partners Howard Wu in Shanghai and Ingo Strauss in Düsseldorf are advising Metro. They are supported by partners Grace Tso in Hong Kong; Frank Zhuang in Baker McKenzie's Shanghai Free Trade Zone alliance firm, FenXun Partners; Heiko Gotsche in Düsseldorf; and Christian Atzler and Michael Fammler in Frankfurt.

According to a recent report by Baker McKenzie, domestic mergers and acquisitions in China will decline next year due to the slowdown in economic growth and the continuing trade dispute with the United States. The firm forecasts next year will have 2,527 Chinese deals worth a combined $194.6 billion – down from 2,858 deals worth $223.3 billion this year. But the firm predicts Chinese deal activity will pick up again in 2022 to 2,848 deals worth $299 billion, which could be the largest total deal value since 2016.

Baker McKenzie is also currently representing China Yangtze Power Co., a subsidiary of state-owned energy company China Three Gorges Corp., on a $3.59 billion acquisition of U.S.-based Sempra Energy's Peruvian business, in the largest Chinese outbound deal announced so far this year.