June 29, 2011 / 5:42 AM / 8 years ago

UPDATE 1-China's Suning to take controlling stake in Japan's Laox

(Adds analyst quote, background)

* Laox to raise $110 mln through share placement to Suning

* Laox plans to open 150 outlets in China in five years

* Suning plans to expand overseas revenue to 15 pct of total

By Samuel Shen and Kazunori Takada

SHANGHAI, June 29 (Reuters) - Suning Appliance Co Ltd , China’s biggest electronics retailer, said it will take a controlling stake in Japan’s Laox Co Ltd in a deal aimed at boosting overseas business and broadening revenue streams.

Suning and its parent would buy 9 billion yen ($110.9 million) worth of newly-issued Laox shares, giving them a combined 65 percent stake in the money-losing Japanese retailer, it said. Currently, Suning has a 34 percent stake in Laox.

“The transaction will help Laox improve its management and core competitiveness, and solidify Suning’s platform for overseas expansion,” Suning said in a statement to the Shenzhen Stock Exchange late on Tuesday. “Suning plans to introduce Japan’s retail operation model and products, which will strengthen our operations, improve our profitability and benefit the company’s long-term development.”

Suning is ramping up expansion to grab a bigger share of China’s fast-growing electronics consumer market after U.S. retail giant Best Buy Co Inc closed its branded stores in China and major domestic rival Gome Electrical Appliances Holding Ltd suffered management reshuffles and scandals involving founder Huang Guangyu.

Over the next decade, Suning said it planned to open 200 new stores per year and to expand overseas revenue to 15 percent of the total, from nearly zero at present.

Suning first invested in 80-year-old Laox in 2009. Laox posted a net loss of 2.4 billion yen for the fiscal year ended March 31, up from a net loss of 11.9 billion yen the previous year.

Laox will issue 257 million shares in a private placement to Suning and its parent, giving Suning 51 percent, up from 34 percent, and giving Suning’s parent a 14 percent stake.

Laox would use the proceeds to open shops in China and Japan, with plans to open 150 Laox Life outlets in 25 major Chinese cities including Shanghai and Beijing over the next five years, the statement said.

“This is Suning’s differentiation strategy,” said an analyst at Oriental Securities who declined to be named. “By introducing the Laox brand and Japanese products, Suning aims to meet the needs of different types of customers.” ($1 = 81.105 Japanese yen) (Additional reporting by David Lin; Editing by Chris Lewis)

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