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Temasek Holdings said to be in advanced discussions for substantial Watson stake purchase

March 21
7:16 AM 2014

Sources told The Wall Street Journal that Temasek Holdings Pte Ltd is in the advanced stages of talks to purchase a stake in AS Watson & Co owned by Asian billionaire Li Ka-shing. The exact price tag of the investment was not disclosed but the people said it could be to the tune of billions of dollars.

The "strategic" stake purchase of the state investment firm of Singapore could also put an end to Li's plans to list in Hong Kong since the stock exchange does not permit major investments and shareholding changes to take place within 28 days of the application for an inital public offering. Other sources had said that Watson was thinking of lodging its application to list in Hong Kong by the end of this month, the report said. 

Purchasing a stake in Watson, which has drugstores in Hong Kong, Singapore and the UK, would be in line with Temasek's investment approach of making bets in firms that are reaping the benefits of the consumer boom happening in both emerging and developed markets. The sources said it would be one of the largest investments that the firm will make abroad. Temasek currently holds a stake in London-based lender Standard Chartered and Spain-based oil and gas firm Repsol. One of the sources added that if an agreement will be reached between Watson and Temasek, an announcement will not be far behind, report said.

Analysts have pegged the worth of Watson to be over $20 billion. The health and beauty retailer intends to open 1,200 new outlets around the world in 2014. It already has about 10,500 stores located in Europe, Greater China and Southeast Asia as of last year. It posted an 11% rise in earnings before interest expenses and other finance costs, tax, depreciation and amortization to $1.8 billion in 2013, the report said.

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