U.S. apparel retailer Gap Inc has agreed to sell its Greater China businesses to Communist China’s e-commerce service provider Baozun Inc, in an all-cash transaction for an equity consideration of US$40 million, subject to adjustments within the US$50 million limit. The transaction, which is expected to be completed in the first half of 2023, is subject to regulatory approvals. It marks the end of a rocky 12-year journey for GAP, one of the largest U.S. apparel companies, to sell its Greater China operations, including those in mainland China and Taiwan.
Dealmakers have seen opportunities for mergers and acquisitions involving multinational firms that look to spin off their China units, as the growth outlook in the country suffering from the brutal Zero-Covid policy and harsh lockdowns remains uncertain amid intensifying competition with domestic brands.
Gap said additionally that Baozun will operate stores in Greater China under a franchise agreement, adding that the move is the result of a strategic review of the company’s global footprint. The zero-Covid policy of the CCP and the widespread and unpredictable lockdowns that resulted in a sharp decline in consumer spending in Communist China, and the growth of entities operating in China has become increasingly unpredictable.