(Bloomberg) -- Temasek Holdings Pte's sale of a $3 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 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 A.S. Watson's home market of Hong Kong, uncertainties around Brexit have affected the retailer's business in the U.K., where it runs the Superdrug chain, one of the people said.
Temasek, which owns a 25% stake of A.S. Watson, was considering selling about 10% 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 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 rumors,” 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 Singapore investment firm bought the stake in A.S. Watson, which is a unit of Hong Kong tycoon Victor Li's CK Hutchison Holdings Ltd., for HK$44 billion ($5.6 billion) in 2014.
Shares of CK Hutchison rose 2% in early Wednesday trading, while the benchmark Hang Seng Index climbed 1.3%.
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 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.
--With assistance from David Ramli, Yoolim Lee and Philip Lagerkranser.
To contact the reporters on this story: Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net;Joyce Koh in Singapore at jkoh38@bloomberg.net;Vinicy Chan in Hong Kong at vchan91@bloomberg.net
To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, Amy Thomson
©2019 Bloomberg L.P.
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