Monday, October 21, 2013
Hutchison Whampoa Retreats As PARKnSHOP Plan Scrapped
HONG KONG (NQN)--Shares in Hutchison Whampoa Ltd. (HWL) are falling back Monday after the company said Friday evening it would scrap its plan to sell its PARKnSHOP supermarket chain.
The stock of the Hong Kong-based conglomerate briefly dropped 3.2 Hong Kong dollars, or 3.2%, to 93.6 Hong Kong dollars. The stock had been rising as the sale was seen to be worth up to 3 billion U.S. dollars. Disappointed investors are selling the stock following HWL's announcement.
PARKnSHOP is operated by A.S. Watson & Co., which has food and retail businesses in Asia and Europe. Ever since HWL announced its plan to sell the supermarket chain on July 20, various firms emerged as potential purchasers, including Chinese conglomerate China Resources Enterprise Ltd., Japanese supermarket operator Aeon Co. (8267) and U.S. giant Wal-Mart Stores Inc. Recently, Australian supermarket chain operator Woolworths Ltd. was seen as a prime candidate.
Although it was once seen that the bid could reach 4 billion U.S. dollars, HWL announced Friday evening it would scrap the sale of PARKnSHOP, concluding that the sale now would not produce the best benefits for shareholders. It is also believed that the deal was botched this time because conditions were not met between HWL and possible purchasers that tried to lower acquisition prices.
HWL will revise its business strategy to maximize benefits that A.S. Watson will receive.