This Supermarket Bid May Help Wal-Mart Park It in China
Wal-Mart Stores (NYSE:WMT) might be poised to extend its retail power even further. Not only is the retail giant continuing to expand and open new stores in places like China and Brazil, it may also be in the running for the acquisition of Asia’s richest supermarket business.
Forbes ranked Octogenarian Li Asia’s richest man in 2012 and his supermarket business, ParknShop, as the reason to thank for that success. Reuters reports that the enterprise operates 345 stores in Hong Kong, mainland China, and Macau, and is valued at $4 billion. But now, despite its huge success — especially in Hong Kong — Li’s Hutchinson Whampoa Ltd. conglomerate is ready to take bids for ParknShop so it can more narrowly focus its efforts on its health and beauty business sectors.
Recent reports elucidate that Wal-Mart is on ParknShop’s list of bidders along with a handful of other corporate and private equity buyers who were told to meet an August 16 deadline. Since Li’s ParknShop and Singapore’s Dairy Farm International Ltd. are what dominate the majority of Hong Kong’s supermarket business, both private and corporate buyers are vying for the opportunity to expand in China and get a foot in the market. The other parties also in the process of weighing bids include Japan’s Aeon Co Ltd., China Resources Enterprise Ltd., Sun Art Retail, Westfarmers Ltd., and Woolworths Ltd., as reported by Reuters.
Wal-Mart’s ability to win the bidding war would likely prove especially constructive for the retail company as it has continually faced setbacks and challenges managing its growth in China. It currently operates 380 stores there, including its Supercenters, Sam’s Clubs, and Neighborhood Markets, but still has yet to find its niche in the market. Nonetheless, it plans to open 100 new outlets over the next three years there — and the retail giant also believes its addition of 18,000 jobs will help boost its China business.
If Wal-Mart was able to break into Hong Kong’s lucrative grocery market that is already dominated by ParknShop and Dairy Farm International Ltd., it would undoubtedly find its big break in the country’s business sector that has previously proven so hard to break into.
ParknShop would effectively serve as a platform from which Wal-Mart could then expand into China, but still, the Bentonville, Arkansas-based chain must get in line with a long list of other similarly interested buyers. Luckily for Wal-Mart, however, the retail giant undoubtedly has the funds and buying power it needs to beat out certain private equity firms — it’s now just a matter of whether Li will let Wal-Mart do it.
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