Carrefour, Europe's largest retailer, took a decisive step on Sunday toward a full exit of the Chinese market by selling a majority stake of its activities in the country to Suning.com.
Carrefour, which has been in China since 1995, has spent years trying to fix a business where 2018 sales fell 5.9% to 4.1 billion euros ($4.66 billion) amid fierce competition from local players and a buoyant online market.
The French retailer said in a statement it had agreed to sell 80% of its Chinese operations to Chinese group Suning.com for 620 million euros in cash.
The agreement also includes several windows of opportunity to sell the remaining 20% stake it holds in the Chinese subsidiary, further indicating its intention to leave the market entirely.
"The stake acquisition will allow Suning.com to strengthen its brand, as well as boosting its marketing capabilities, food quality control and supply chain management in the fast-moving sector," Suning.com Co Ltd said in a Chinese-language filing to the Shenzhen stock exchange on Sunday.
The deal with Suning.com also puts an end to preliminary talks Carrefour has held with Chinese tech giant Tencent over a potential sale of a minority stake in its local business.
"The talks that have started since January 2018 for the sale of a minority stake (in Carrefour China) to Tencent are over," a spokeswoman for Carrefour said. "However, the strategic business partnership with Tencent remains in place."
Carrefour announced a partnership last year with Tencent, which led to the opening of a store in Shanghai.
Carrefour also said at the time that Tencent and Yonghui , a retailer specialising in fresh food and small stores, could take a stake in Carrefour China.
Tencent declined to comment.
The deal values Carrefour China at 1.4 billion euros ($1.59 billion), debt included, and is expected to close by the end of 2019, pending regulatory approvals, the French retailer said in a statement.
Carrefour China operates 210 hypermarkets and 24 convenience stores. It generated net sales of 3.6 billion euros and earnings before interest, tax, depreciation and amortisation (EBITDA) of 66 million euros in 2018.