As part of its strategy for global expansion, The Home Depot Inc. has signed a definitive agreement to acquire The Home Way, a home improvement retailer in China.
The transaction has received the necessary Chinese government regulatory approvals and is expected to close by the end of the year. Terms of the deal were not disclosed.
Founded in 1996, The Home Way is headquartered in Tianjin. It was the first big box home improvement retail chain in China, with stores averaging 90,000-square-feet of selling space.
The Home Way operates 12 stores in six Chinese cities.
While Home Depot, Atlanta, opened a business development office in China in late 2004, the deal with The Home Way is expected to accelerate the company’s understanding of consumers and retail operations in the Chinese market.
The Chinese home improvement market is currently valued at nearly $50 billion and has been growing at a compounded annual rate of 20 percent. Approximately 70 percent of home improvement spending in China is for the completion of interior space in new homes. This represents a growth opportunity for Home Depot because of its strength in merchandise and services geared to finishing out a home.
The nation’s second largest retailer after Wal-Mart Stores Inc., Home Depot entered Canada in 1994 and Mexico in 2001 through a combination of acquisitions and organic growth. It today holds the No. 1 position in both markets, according to the company.
The Home Depot is the second U.S.-based big-box retailer to set its sights on China in recent months. In September, Office Depot entered into a definitive agreement to gain a controlling interest in AsiaEC, one of the largest dealers of office products and services in China.