ParknShop, the supermarket chain owned by Hong Kong billionaire Li Ka-shing, attracted at least eight offers from suitors including China Resources Enterprise Ltd., said people with knowledge of the process.
The bids range from $3 billion to $4 billion, said one of the people, who asked not to be named because the deliberations are private. Private-equity firms KKR & Co. and TPG Capital also submitted preliminary bids, two people said.
Li’s biggest company, Hutchison Whampoa Ltd. (13), had asked for offers for the Hong Kong grocery chain by yesterday, people with knowledge of the process had said. ParknShop, which sells everything from eggs to whiskey, is one of the two largest chains in Hong Kong’s $6.6 billion supermarket industry. Hutchison is looking into a sale as it accelerates overseas investments and expands in telecommunications.
Spokesmen at Hutchison, TPG and KKR declined to comment. Calls to China Resources (291) weren’t immediately returned outside regular business hours yesterday.
Sun Art Retail Group Ltd. (6808), Japan’s Aeon Co., Lotte Shopping Co., Woolworths Ltd. and Wesfarmers Ltd. (WES) also made preliminary offers, said people with knowledge of the matter. Representatives for the companies didn’t reply to requests for comment made outside regular business hours yesterday.
ParknShop, which had revenue of HK$21.7 billion ($2.8 billion) last year, has more than 270 of its 345 outlets in Hong Kong. Sales growth in the city’s supermarket industry slowed to 7.9 percent in May from last year’s annual increase of 11 percent and a 2011 peak of 13 percent, government statistics show.
ParknShop’s outlets in mainland China have also struggled owing to competition from rivals such as Sun Art. It 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.
China Resources got 6.9 percent of its sales from Hong Kong last year, according to data compiled by Bloomberg. The company also has retail outlets on the mainland and a beer joint venture with SABMiller Plc. (SAB)
ParknShop’s first store opened in 1973 in Hong Kong’s Stanley beach area, one of the few neighborhoods in the congested city where shoppers can actually park near stores. Hutchison reiterated yesterday that its subsidiary AS Watson & Co., which operates the ParknShop chain, is still working on a strategic review of the grocer, and that there’s no guarantee a transaction will occur.
Nicknamed “Superman” by Hong Kong’s media for his investing prowess, the 85-year-old Li is Asia’s richest man with a net worth of $27.9 billion, according to the Bloomberg Billionaire’s index.
Tesco Plc, the U.K.’s biggest grocer, on Aug. 9 said it will fold its 131 hypermarkets in China into the empire run by China Resources and retain a 20 percent stake in the venture.