Temasek postpones sale of US$3b AS Watson stake

Hong Kong

TEMASEK Holdings Pte is postponing the sale of a minority stake in AS Watson Group, the retailer backed by Hong Kong tycoon Victor Li, as months of anti-government protests continue to rock the city, people with knowledge of the matter said.

The Singapore state 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 are private. In addition to the turmoil in AS Watson's home market of Hong Kong, uncertainties around Brexit have affected the retailer's business in the United Kingdom, where it runs the Superdrug chain, one of the people said.

Temasek, which owns 25 per cent of AS Watson, was considering selling around a 10 per cent holding in the retailer for about US$3 billion after receiving some preliminary interest, Bloomberg News reported earlier this year. Abu Dhabi's sovereign wealth fund and Chinese internet giants Tencent Holdings Ltd and Alibaba Group Holding Ltd were among parties that had shown interest in the 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 emailed 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 people said.

The investment firm bought the stake in AS Watson, which is a unit of CK Hutchison Holdings Ltd, for HK$44 billion (S$7.8 billion) in 2014.

Founded in Hong Kong in 1841, AS 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 health-care and beauty shops across Asia, as well as groceries, electronics shops and wine stores in Hong Kong. Among its 140,000 employees worldwide, 12,900 are based in the former British colony. BLOOMBERG