State-backed China Resources Enterprise has pulled back on its ParknShop bid, according to a source familiar with the matter.
“The company could not get comfortable with the valuation and price,” the source said. According to reports, Hutchison Whampoa is asking about $3 billion-$4 billion for its ParknShop supermarket chain.
However, given the fluid nature of the deal process - where bidders come and go - it is possible that the company may re-join the process at a later stage.
CRE last week signed a joint venture with UK retailer Tesco to combine their Chinese retail operations. As part of the agreement, Tesco will combine its 134 Chinese stores with CRE’s Vanguard business, which has nearly 3,000 stores on the mainland and Hong Kong.
ParknShop is mainly a Hong Kong business but it also has a presence on the mainland, where it operates about 65 stores.
Hutchison Whampoa, which is controlled by Li Ka-shing, Hong Kong's richest man, undertook a strategic review of its ParknShop chain a few months back. As part of that review, it invited bids from parties.
Private equity players had put in bids at an earlier stage but had dropped out from the process as their bids were low. Other bidders include Aeon, Woolworths and CP Group, which has teamed up with Carlyle.
Bank of America Merrill Lynch and Goldman Sachs are advising Hutchison Whampoa.
A Hutchison Whampoa spokesman said that the company does not comment on market speculations. CRE could not be reached for comment.
