Hutchison Whampoa, controlled by Hong Kong’s richest man Li Ka-shing, has scrapped the sale of ParknShop, Hong Kong's largest supermarket chain by market share.
The company said that, after completing an initial strategic review with advisors Goldman Sachs and Bank of America Merrill Lynch, a sale of ParknShop by a private market transaction “would not deliver maximum value" to the shareholders of the company.
Hutchison was seeking $3 billion-$4 billion for the supermarket chain, which was deemed to be steep for a mature market such as Hong Kong, and one that faces expensive rents.
According to one source, there was a mismatch in valuations between what Hutchison was looking for and what bidders were prepared to pay, and Hutchison was disciplined as to the price it was willing to accept.
Bidders for ParknShop included CP Group - controlled by Thai billionaire Dhanin Chearavanont – which was teaming up with private equity firm Carlyle; Australian retailer Woolworths and Japanese retail Aeon. At least one bidder -- China Resources Enterprises -- had pulled out because it was not comfortable with the asking price.
Hutchison said it would continue to implement an “accelerated growth strategy with a particular focus in mainland China." Having not achieved the kind of valuations it was looking for through a private sale, it hinted that it could potentially list AS Watson, the division that owns ParknShop, instead.
In a statement to the Hong Kong stock exchange on Friday, Hutchison said it has decided to expand its strategic review process to include options for maximising the value of the AS Watson retail businesses going forward. This includes the possibility of public offerings of “all or some of those businesses," it added. It also said that Hutchison would not consider giving up control of any of the businesses.
A move to list AS Watson but retain a stake would be in line with that adopted by Power Assets Holding, which is also controlled by Li Ka-shing. Power Assets announced late September that it was spinning off its Hong Kong Electricity arm through a business trust listing.