HONG KONG—By the deadline on Aug. 16 for bids for the purchase of ParknShop, one of Hong Kong’s two largest grocery chains, eight local or foreign financial groups had submitted letters of intent, but the highest bid did not reach the asking price of US$4 billion.
China Resources Enterprise, a subsidiary of the giant, state-owned China Resources, has been deemed by observers to be the preferred choice and has also showed much interest in the purchase.
The CFO of China Resources Enterprise, Lai Ni-hium, said during the company’s interim performance reporting meeting on Aug 21, “ParknShop has a long history and good reputation as a supermarket in Hong Kong, growing with the Hong Kong people. China Resources’ bid was based on the brand of ParknShop and its excellent management.
“The current net cash at China Resources Enterprise is only HK$3.756 billion, far from being enough to buy ParknShop. China Resources Enterprise has no debt and has a full year cash flow of about HK$9 billion, The company has the ability to purchase ParknShop, if the company can purchase it in stages through appropriate payments.”
Hong Kong citizens have seen their market shelves stripped bare of powdered milk, as mainlanders have swarmed Hong Kong looking for safe products. People in Hong Kong are worried that if the mainland company China Resources Enterprise takes over ParknShop, poisonous food from the mainland will enter Hong Kong through the grocery chain. Hong Kong will then be in a position similar to mainland China, where food safety is a constant issue.
An analyst pointed out that as ParknShop is precious to owner Li Ka-shing, the sale price will need to be close to the asking price of US$4 billion.