Hutchison Stops Shopping ParknShop; Li Ka-Shing’s Conglomerate Had Hoped to Reap As Much as $4 Billion for the Supermarket Chain

October 19, 2013 Leave a comment

Hutchison Stops Shopping ParknShop

Li Ka-Shing’s Conglomerate Had Hoped to Reap As Much as $4 Billion for the Supermarket Chain

PRUDENCE HO

Oct. 18, 2013 10:29 a.m. ET

HONG KONG— Hutchison Whampoa Ltd. 0013.HK +0.78% , controlled by Asian’s richest man, Li Ka-shing, has decided not to sell its ParknShop supermarket chain, after concluding the private sale at this time wouldn’t deliver maximum value to shareholders. The conglomerate also said Friday that it is considering expanding a strategic review of retail arm A.S. Watson & Co.—which includes ParknShop—to include possible public offerings of all or part of the business, though it wouldn’t relinquish any control.A.S. Watson has 11,093 stores in 33 markets in Asia and Europe, including ParknShop, health-and-beauty chain Watsons, Fortress electrical-appliances chain and Watson’s Wine. In Europe, it also operates a number of health-and-beauty chains—Drogas, Kruidvat, Rossmann, Savers, Spektr, Superdrug, Trekpleister and Watsons Ukraine.

The retail business posted first-half revenue of 75.8 billion Hong Kong dollars ($9.8 billion), a 38% increase from a year earlier, while earnings before interest and tax rose 14% to HK$4.3 billion.

Hutchison launched the sale of ParknShop in June, seeking to fetch between $3 billion and $4 billion. Four bidders remained in the running for the supermarket chain after eight applicants submitted bids for ParknShop by mid-August. The four were Australian supermarket operator Woolworths Ltd. WOW.AU +1.62% , Chinese supermarket chainChina Resources Enterprise Ltd. 0291.HK +1.14% , Japanese department-store operator Aeon Co. and a joint bid by Thai billionaire Dhanin Chearavanon and Carlyle GroupCG -0.16% LP, people familiar with the situation have said.

ParknShop, which has 345 outlets in Hong Kong, Macau and southern China, has a 19% share of Hong Kong’s fresh-food and consumer-goods market, according to researcher Nielsen Homescan. The second-largest supermarket chain, Jardine Matheson Holdings Ltd.’s, has 15% of the market.

Hutchison said ParknShop will continue to implement a growth strategy with a particular focus in China.

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