Temasek to buy 24.95pc of Li's Watson for US$5.67bn

March 21, 2014 - 2:17:51 pm

HONG KONG: Asia's richest man Li Ka-shing announced Friday that a Singapore state investment fund had agreed to buy just under 25 percent of his flagship retail chain, in a deal worth more than US$5.6 billion.

Singapore's Temasek will purchase 24.95 percent of A.S. Watson part of Li's vast Hutchison Whampoa conglomerate for HK$44 billion or $5.67 billion, a Hutchison statement said, calling it a "strategic alliance".

Watson had "grown internationally in the past two decades" with more than 10,500 stores worldwide, the statement said, adding that the deal valued the retail chain at HK$177 billion.

The announcement came as a surprise as markets had expected that Li's Watson would be listing in Hong Kong and London by June, in what could have been the world's biggest initial public offering since late 2012, predicted to raise $6 billion.

But in light of the new deal, Li said the listing would be "unlikely" this year and that it would now be pushed back by two to three years, without explaining further. 

He also said that the company would be listed in two places, but not London. 

"I am now thinking that it would be in Hong Kong and Singapore," Li said of the possible listing locations.

He said that the Temasek alliance was a quicker way to raise capital than the listing process.

"The reason to list is to raise capital, the way I do it now is faster, what's bad about that?" he told reporters at a press conference after the deal was announced.

"Temasek liked it so much they offered us 25 percent, then Mr. Li said one investor is better than an IPO," Hutchison group managing director Canning Fok said at the press conference.

A.S. Watson owns health and beauty retailer Superdrug, which has more than 870 stores in Britain and Ireland." 

"As well as the ParknShop grocery chain in Hong Kong.

Its flagship brand Watsons is Asia's largest health and beauty retailer, with over 4,000 stores and more than 900 pharmacies around the world, including in 10 Asian markets.

Li had last year aborted an attempt to sell ParknShop after suitors, among them Australia's Woolworth Ltd. failed to meet his $3 billion to $4 billion asking price.

Hutchison Whampoa said in February it saw a 20 percent year on year increase in net profits for 2013, fuelled by growth in its port, hotel and property divisions, despite challenging global markets.

Li started out in business as a plastic flower-maker but now commands a vast empire through Cheung Kong Holdings and Hutchison Whampoa, with global assets in property, telecoms, utilities, ports and retail. (AFP)