BILLIONAIRE Li Ka-shing's Hutchison Whampoa Ltd said it's scrapping a private sale of its ParknShop supermarket chain and is considering selling shares in its A.S. Watson Group retailing unit.
The decision followed a review by Goldman Sachs Group Inc and Bank of America Corp, Hutchison said in a statement yesterday. While it's evaluating options for Watson, including a public offering, the Hong Kong-based company won't consider giving up control of the unit, according to the statement.
Hutchison was seeking US$3 billion to US$4 billion (RM9.45 billion to RM12.6 billion) for the supermarket chain that controlled 33 per cent of the city's grocery market last year, a person with knowledge of the matter said in August.
Charoen Pokphand Group and Australia's Woolworths Ltd considered dropping their bids for ParknShop, which is a part of the Watson Group, two people with knowledge of the matter said on Friday.
"The asking price was too aggressive," Ronald Wan, chief China adviser at Asian Capital Holdings Ltd, which has about US$100 million of assets under management, said on Saturday.
"Hutchison couldn't sell with maximum gain and the transaction price of ParknShop would have affected the valuation of Watson, so it chose to drop the plan."
ParknShop attracted initial offers in August from suitors including China Resources Enterprise Ltd, Sun Art Retail Group Ltd, Japan's Aeon Co, Woolworths and CP Group, according to people with knowledge of the process.
Any investor in Watson or ParknShop would face a slowing grocery market and surging rents in Hong Kong, where property agent Savills Plc estimates shop rents have doubled over the past four years.
Sales growth in Hong Kong's supermarket industry slowed to 7.7 per cent in June from last year's annual increase of 11 per cent, government statistics show.
ParknShop, which sells everything from eggs to whiskey, has more than 270 outlets in Hong Kong, Hutchison's 2012 annual report showed.
The chain's market share trailed the 40 per cent held by Wellcome, which is controlled by Singapore-listed Dairy Farm International Holdings Ltd, according to researcher Euromonitor.
CR Vanguard Supermarket, run by state-backed mainland conglomerate China Resources, ranked third with 7.8 per cent, according to Euromonitor.
Hutchison "will continue to implement an accelerated growth strategy with a particular focus in mainland China", the company said.
In a separate statement on Friday, Hutchison said it and Cheung Kong Holdings Ltd will each sell a 50 per cent stake in Extreme Selection, the owner of a company developing a project in Shanghai's Lujiazui financial district, for US$1.16 billion.
Cheung Kong, a property developer also controlled by Li, owns 52 per cent of Hutchison, data compiled by Bloomberg show.
HYZL Development Co and HYZL Investment Co will each buy 47 per cent, while Diamond Gate Group Ltd, a China Everbright Ltd subsidiary, will take the remaining six per cent, according to an Everbright statement on Saturday. Bloomberg