Hutchison, the Hong Kong conglomerate controlled by billionaire Li Ka-shing, is in talks with about five potential buyers after reviewing first-round bids for its ParknShop chain, one of the people said, asking not to be identified because the process is private. Hutchison is seeking $3 billion to $4 billion for the unit, a person familiar with the sale said this month.
ParknShop attracted eight offers in mid-August from suitors including China Resources Enterprise Ltd. and Sun Art Retail Group Ltd., according to people with knowledge of the process. The supermarket operator, which sells everything from eggs to whiskey, is one of the two largest chains in Hong Kong’s $6.6 billion supermarket industry.
KKR & Co., TPG Capital, Japan’s Aeon Co. and Woolworths Ltd. were also among those who made offers in the first round of bidding, the people said earlier this month. TPG and KKR have since dropped out of the process, people with knowledge of the matter said.
While some bidders that do not have operations in Hong Kong are asking Hutchison to retain a small stake in ParknShop and continue managing the stores, Hutchison would prefer an outright sale, one person said.
Dhanin is buying at home and abroad, accounting for more than half of the $27 billion in purchases announced in the last year by Thai companies, including CP Group’s purchase of a $9.4 billion stake in China’s Ping An Insurance (Group) Co. CP All Pcl, a Bangkok-based 7-Eleven operator controlled by the billionaire, recently struck Thailand’s largest ever takeover with the 189 billion baht ($5.9 billion) purchase of discount wholesaler Siam Makro Pcl.
Suthana Hongthong, assistant vice president for Corporate Communication Affairs at CP Group, declined to comment. Jeremy Lau, a spokesman for Hutchison, declined to comment on the ParknShop sale. Spokesmen for KKR and TPG couldn’t be reached.
Hong Kong-based China Resources (291) has said it may partner with Tesco Plc to bid for ParknShop, which had revenue of HK$21.7 billion ($2.8 billion) last year, and has more than 270 of its 345 outlets in Hong Kong.
Hutchison is looking into a sale as it accelerates overseas investments and expands in telecommunications. Sales growth in Hong Kong’s supermarket industry slowed to 7.7 percent in June from last year’s annual increase of 11 percent and a 2011 peak of 13 percent, government statistics show.
ParknShop had 33 percent of the Hong Kong grocery market in 2012, trailing Wellcome, controlled by Singapore-listed Dairy Farm International Holdings Ltd. (DFI), with 40 percent, according to researcher Euromonitor. CR Vanguard Supermarket, run by state-backed mainland conglomerate China Resources, ranked third with 7.8 percent.
Dhanin has a net worth of $5.8 billion, according to the Bloomberg Billionaires Index. Many of his assets are owned through closely-held holding companies that he shares with his three brothers. Dhanin’s net worth calculation excludes the stakes held by his brothers, Jaran Chiaravanont, Montri Jiaravanont and Sumet Jiaravanon.
Thailand's Charoen Pokphand Group and Australia's Woolworths are believed to be the final two bidders for ParknShop.
This comes as Japan's Aeon Group and state-owned China Resources (0291) are understood to think the HK$30 billion asking price is too steep.
Not so Richard Sun Po-yuen at PricewaterhouseCoopers, who thinks the tag for the supermarket chain is reasonable.
Thai tycoon Dhanin Chearavanont's CP Group is teaming up with US private equity firm Carlyle on the bid, with him saying a winning bid will support the mainland supermarket business run by CP Lotus (0121).
Shares of CP Lotus fell up to 17 percent yesterday after it said the firm is not involved in the bid. It closed at HK$0.26 yesterday, down 10.3 percent.
CP Lotus has 56 supermarkets in the mainland but none in Hong Kong.
Rival Woolworths, which operates 3,000 outlets in Australia and New Zealand, has no SAR operation either.
CP Group, meanwhile, wants a loan of four billion yuan (HK$5.07 billion) to develop a commercial plot in Beijing. A total of nine billion yuan, including the land price, will be invested.
One of the two commercial buildings will become CP Group's China headquarters, a report said.
PwC said besides ParknShop, there will be mergers and acquisitions in the coming year as prices remain acceptable due to sluggish global economy.
Sun said the number of outbound merger and acquisition deals for mainland companies in the first nine months this year was 151 and involved US$21 billion (HK$163.8 billion).
The US$7.1 billion takeover of Smithfield Foods by China's largest meat processor Shuanghui International Holdings is among this year's most remarkable deals.
Shuanghui chairman Wan Long said yesterday that it may launch an initial public offering on the local bourse.