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<Research>Citi: Potential ParknShop-Wellcome Merger Faces Key Risks in Feasibility & Lengthy Timeline
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Last Friday (17th), a report from the Financial Times quoted sources as saying that Jardine Matheson, DFI's parent company, was in discussions with CKH HOLDINGS (00001.HK) regarding the acquisition of the latter's supermarket business (primarily ParknShop under AS Watson Group), which Jardine Matheson might merge with DFI's supermarket business in Hong Kong (mainly Wellcome), according to a report released by Citi. Jardine Matheson and DFI declined to comment on the matter, while CKH HOLDINGS didn't give any replies. From Citi's perspective, the strategic rationale behind this potential merger is understandable, which is to create the largest single supermarket chain in Hong Kong to compete with players inside and outside the city. Given Hong Kong's antitrust regulations and DFI management's requirements on return on investment and total shareholder return, however, Citi emphasized that the transaction faces key risks in terms of feasibility and a potentially lengthy timeline. Regardless of whether this deal will materialize, Citi has kept its investment thesis on DFI unchanged. Auto-translated by AI AASTOCKS Financial News |
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