Brand e-commerce service provider Baozun Inc. has signed definitive agreements to acquire Gap Greater China in an all-cash transaction with a primary consideration of USD 40 million.
Gap Inc. (GPS: NYSE) is selling its Greater China business to Baozun (BZUN: NASDAQ), an e-commerce operator based in Shanghai. The deal has the main size of USD 40 million and is open to revisions of up to USD 50 million. It's anticipated that the transaction will be finished in the first half of 2023. The deal with Baozun will allow Gap to focus on its core markets and continue to operate in China through a low-cost, asset-light model.
Under the agreement, Baozun will manage and operate the Gap brand and business in Greater China, including Gap stores, staff, partner relationships and assets. The deal is valid for an initial 10-year period and can be renewed twice every five years. Baozun, founded in 2006, has been Gap’s e-commerce operator in China for a decade. It also operates online businesses for brands like Nike, Calvin Klein and Zara.
Gap entered the Chinese market in 2010 and has more than 200 stores in mainland China and 16 in Taiwan. However, Gap has been struggling recently, slumping its flagship brands' sales. According to the company’s second-quarter results, operating losses racked up to USD 49 million while net sales dropped 8 percent to $3.86 billion compared to the same time last year. The company has been forced to shut down stores in various cities due to the COVID-19 pandemic.