(Corrects figure in headline to 2-1/2 years, not 2-1/5 years)
By Donny Kwok
HONG KONG, March 24 Hutchison Whampoa
shares fell as much as 6 percent on Monday after a $5.7 billion
deal to sell a stake in its health and beauty retailer to
Singapore state investor Temasek Holdings disappointed
investors hoping for a higher valuation.
The stock saw its steepest drop in 2-1/2 years in the first
trading session after Temasek on Friday agreed to buy just under
a quarter of retailer A.S. Watson in a deal that valued the
company at $22.8 billion.
Traders said shareholders believed A.S. Watson's valuation
would have been at higher at around $29 billion if Hutchison
owner, Asia's richest man Li Ka-shing, had stuck to his plans to
float a stake via an initial public offering this
"Investment funds unloaded their holdings as hopes of a
spinoff vanished - at least it won't happen in the next two
years or so," said Alfred Chan, chief dealer at Cheer Pearl
Hutchison's shares fell to as low as HK$100.6 ($12.97),
their biggest daily decline since October 2011. Billionaire Li
said after the Temasek deal was announced that any A.S. Watson
IPO would happen in two to three years, and the stock would
likely be listed in Hong Kong and Singapore.
Shares of Hutchison, which has a market value of $59
billion, are up 1.5 percent so far this year.
Li's decision to sell a stake to a strategic investor comes
after recent stock offerings in Hong Kong were hit by investor
worries about China's economic slowdown, a factor that has
helped to push the benchmark Hang Seng index down about 7
percent so far this year and led to two Hong Kong IPOs being
pulled this month.
A.S. Watson's business includes personal care stores which
dominate the beauty and health market in China, a sector
forecast to grow by around 40 percent to $186 billion by 2015.
The strategic review for the retail business came about last
year after Li scrapped the sale of Hong Kong supermarket chain
The Watson retail arm includes ParknShop, Watsons, Superdrug
and Kruidvat personal care stores, Fortress electronic appliance
outlets, and chains selling food and wine and luxury and
($1 = 7.7588 Hong Kong Dollars)
(Additional reporting by Anne Marie Roantree and Denny Thomas;
Editing by Miral Fahmy)