Temasek acquires 24.9% in Li Ka-shing's A S Watson Co for $5.7 bn

Temasek Holdings, Singapore's sovereign wealth fund, today agreed to buy a 24.9-per cent stake in billionaire Li Ka-shing's health and beauty chain A S Watson Co, for $5.7 billion.

Temasek, which has a $170 billion investment portfolio, last week led a consortium to buy the remaining stake that it does not already own in commodities trader Olam International, in deal valuing the Singapore-based company at $4.3 billion. (See: Temasek led consortium to buy Olam International in $4.3 bn deal)

Temasek's investment in Hong Kong-based Watson values the company at HK$177 billion ($22.8 billion).

''With this investment, Temasek has increased its exposure to the consumer retail sector, with a balanced focus on a growing Asia and a recovering Europe,'' Temasek said in a statement.

''The consumer retail sector is a good proxy to growing middle-income populations and transforming economies. This is very much part of our investment themes as we shape Temasek's portfolio for the long term,'' said, Chia Song Hwee, head of Temasek's Investment Group.

Multinational conglomerate Hutchison Whampoa, had said in October last year that it would conduct a strategic review of its subsidiary Watsons, after bids for Watson's supermarket chain ParknShop came in below the $3 billion to $4 billion price tag it was seeking. (See: Hutchison Whampoa scraps sale of Hong Kong supermarket chain ParknShop)

Li Ka-shing, Asia's richest man, last month said that he is planning a dual listing for Watson in Hong Kong and probably London later this year with plans to raise as much as £3.6 billion.

Li Ka-shing today told reporters that he was still considering an IPO for Watson in Hong Kong and Singapore, but maybe in two to three years.  ''We concluded this deal very quickly,'' he said at the briefing announcing the Temasek deal.

Post closing, Hutchison said it will use the proceeds to pay a special dividend of HK$7 a share to its shareholders, and use the rest for its general working capital needs.

As of the end of last year, Watson had around 10,500 stores in 25 markets across Europe, Greater China and Southeast Asia. Last year, Watson reported an 11 per cent increase in earnings before interest expenses and other finance costs, tax, depreciation and amortization. The total rose to HK14.2 billion ($1.8 billion), driven by new store openings.

Watson, Asia's largest health and beauty retailer, has around 10,500 stores in 25 markets across Europe, Greater China and Southeast Asia.

Its leading store brands include Superdrug, ParknShop, Watsons, Kruidvat, Rossmann, Trekpleister, Savers, Marionnaud, ICI Paris XL, Drogas, Ctiektp, Nuance Watsons, The Perfume Shop, and others.

Its flagship brand, Watsons, operates over 4,000 stores and more than 900 pharmacies worldwide, including 10 Asian markets in China Hong Kong, Taiwan, Macau, Singapore, Thailand, Malaysia, the Philippines, Korea, and Indonesia, as well as Turkey and Ukraine.

Last year, Watson reported revenues of HK14.2 billion ($1.8 billion) and net profit of around HK$7.8 billion.