M&G Snapping Up Office Depot’s China Operations

(Beijing) – American office equipment supplier Office Depot Inc. has agreed to sell its China operations to a Shanghai-based peer as part of an ongoing divestment of its weakening international operations.

All the China businesses are slated to be sold for an undisclosed amount to Shanghai M&G COLIPU Office Supplies Co. Ltd., a wholly owned subsidiary of Shanghai M&G Stationery Inc., Office Depot said in a statement.

Shanghai-listed M&G is a leading Chinese stationery maker, which has topped the list of writing instrument manufacturers, compiled by the China National Light Industry Council, for consecutively five years.

Office Depot’s more than 600 employees in China operate online businesses through subsidiaries in several cities including Beijing and Shanghai.

However, its China businesses shouldered debt of 375 million yuan ($55 million) by the end of last year and made a net loss of 62 million yuan in 2016, according to an M&G statement.

The deal, which is subject to regulatory approval, is expected to close within several months, Office Depot said.

Office Deport in March reported a 6% decline in worldwide sales last year compared to 2015. As part of a plan to improve profitability, the company said it was seeking buyers for operations in China, South Korea, Australia and New Zealand following the sale of its European business in December.

It completed the sale of the South Korean subsidiary two months ago, while the deals for Australia and New Zealand units are expected to close within the next few months, according to its statements.

Last year, the company said, sales generated outside North America accounted for only 0.2% of the global figure.

“Going forward, our focus is on executing against our strategic initiatives to grow the North American business,” said Gerry Smith, Office Depot’s CEO.

Last year, British retailing giant Marks & Spencer announced it would shutter all China outlets as part of a global pullback involving 53 stores around the world. Half of the company’s stores in France and all shops in Belgium, Estonia and Romania were targeted.

Contact reporter Coco Feng (renkefeng@caixin.com)