Temasek reportedly puts on hold sale of $4.2b Watson stake

No agreement on valuation with potential buyers, say sources

HONG KONG • Temasek's sale of a US$3 billion (S$4.16 billion) stake in retailer A.S. Watson Group has been derailed under the twin pressures of Brexit and the anti-government protests rocking Hong Kong, people with knowledge of the matter have said.

The Singapore investment company put the process on hold after failing to reach agreement on valuation with potential buyers, said the people, who asked not to be identified as the discussions were private.

In addition to the turmoil in A.S. Watson's home market of Hong Kong, uncertainties around Brexit have affected the retailer's business in Britain, where it runs the Superdrug chain, one of the people said.

Temasek, which owns a 25 per cent stake in A.S. Watson, was considering selling about 10 per cent of the retailer after receiving preliminary interest, Bloomberg News reported earlier this year.

Abu Dhabi's sovereign wealth fund and Chinese Internet giants Tencent Holdings and Alibaba Group Holding were among the parties that had shown interest in the Temasek stake, people familiar with the matter have said.

"As per our company policy, we do not comment on market speculation and rumours," Temasek said in an e-mail statement.

Temasek will keep looking into ways to improve the retailer's valuation, one of the people said. It could still resume the sale process in the future, the sources said.

The Singapore investment firm bought the stake in A.S. Watson, which is a unit of Hong Kong tycoon Victor Li's CK Hutchison Holdings, for HK$44 billion (S$7.8 billion) in 2014.

Shares of CK Hutchison rose 2 per cent in early trading yesterday, while the benchmark Hang Seng Index climbed 1.3 per cent.

Founded in Hong Kong in 1841, A.S. Watson runs more than 15,200 stores in 25 markets, including Kruidvat drugstores in the Netherlands and Rossmann pharmacies in Germany, according to its website. It also runs the Watsons chain of healthcare and beauty shops across Asia, as well as grocery outlets, electronics shops and wine stores in Hong Kong.

Among its 140,000 employees worldwide, 12,900 are based in the former British colony.

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A version of this article appeared in the print edition of The Straits Times on September 05, 2019, with the headline 'Temasek reportedly puts on hold sale of $4.2b Watson stake'. Print Edition | Subscribe