Rumor: Gome Factions Make Peace
21st Century Business Herald, 10/17/10
According to source within Chinese electronics retailer Gome (0493.HK), Bain Capital board member Zhu Jia and chairman Chen Xiao reached an agreement with Wong Kwong Yu's representatives Du Juan and Huang Yanhong in Beijing on October 14 during a fresh round of talks.
Du and Huang entered the talks focusing on whether 372 retail locations operated by Wong's Beijing Gome United Technologies will split off, and if not, how Wong's faction will join the board of directors. The two parties have reportedly reached an agreement on these two key issues, according to the source.
The source said that both sides believe a split between the two sets of stores would have a negative impact, particularly for Wong's faction since it would mean the 372 stores would temporarily suspend operations. As a result, both sides agreed not to divide the stores early in discussions.
The 372 stores generated RMB 9.62 bln in sales in H1 2010.
Regarding the second issue, Chen proposed adding two executive board seats and Wong's side agreed, dropping earlier demands for the dismissal of other board members. Chen and Zhu did not agree to Wong's proposal that Zou Xiaochun and Huang Yanhong join the board, in particular due to Zou's lack of management experience.
Though Wong's faction still wishes that Chen would step down as chairman, and has agreed that Chen will continue for a limited period of time.
Keywords: HR Chen Xiao Du Juan Wong Kwong Yu Bain Capital hardware retail Gome 0493.HK Zhu Jia Huang Yanhong Zou Xiaochun consumer electronics
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