Hong Kong conglomerates in talks over ParknShop-Wellcome supermarket merger, report says

Two of Hong Kong’s biggest conglomerates are in talks over a possible merger of ParknShop and Wellcome, the city’s two largest supermarket chains, according to the Financial Times (FT).

ParknShop and Wellcome. Photo: HKFP collage.

The FT reported on Friday that Jardines was in “negotiations” with tycoon Li Ka-shing’s CK Hutchison to acquire ParknShop and merge it with Wellcome, citing four anonymous sources familiar with the matter.

The report cited one source as saying: “Talks have been going on for some time but a deal is not imminent.” The FT’s source declined to comment on valuation.

ParknShop is owned by CK Hutchison’s AS Watson group, while Wellcome is operated by DFI Retail, a subsidiary of Jardines.

There are about 260 branches of ParknShop across Hong Kong and Macau, and about 280 stores of Wellcome, according to publicly available information from the two supermarket chains.

The city’s two biggest supermarket chains have been fierce rivals for decades. If a deal is reached, their merger would create a dominant player in Hong Kong’s food retail market.

The FT cited the US Foreign Agricultural Service as saying that AS Watson and DFI Retail together controlled close to 90 per cent of the city’s supermarket sector in 2023.

However, the report also noted “growing competition from e-commerce and from Hong Kong shoppers crossing the border to buy at lower prices in mainland China.”

One of the sources in the FT report said the market share of the combined group would be less than 50 per cent, citing an “internal assessment.”

A spokesperson for DFI Retail said the company does not comment “on rumour or speculation.”

A spokesperson for AS Watson said the firm declined to comment on “market speculation.”