The Hong Kong-based retail giant that owns Superdrug is plotting a £1bn-plus takeover of Holland & Barrett, the high street health foods chain.
AS Watson Group, which is part of the vast Asian conglomerate CK Hutchison Holdings, has tabled an indicative offer for Holland & Barrett, whose owner has kicked off an auction of the business.
Talks between the two sides are at a relatively early stage, and people close to the situation said that AS Watson may not proceed to a formal takeover bid for the UK-based retailer.
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“They may simply be kicking the tyres, but there is some interest from them,” a retail source said on Wednesday.
Acquiring Holland & Barrett would add another prominent retail chain to a portfolio which also includes The Perfume Shop and Savers, a discount chain.
AS Watson employs 130,000 people around the world and is the largest international health and beauty retailer in Asia and Europe.
In total, it has more than 13,000 shops in 25 countries.
The timing of AS Watson’s interest emerging is significant because it comes as Li Ka-shing, the billionaire tycoon behind CK Hutchison, prepares to retire before his 90th birthday next year.
The Wall Street Journal reported this week that Mr Li, who has for decades overseen some of Britain’s biggest infrastructure assets through his ports and utilities operations, will step down within the next year.
AS Watson is understood to face competition to buy Holland & Barrett from a number of private equity groups and other retail investors.
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The health foods chain is part of a company called NBTY, whose largest subsidiary is a nutritional products manufacturer and retailer called Nature’s Bounty.
Carlyle, the private equity group which owns NBTY, has been hoping to sell the company in its entirety to a single buyer, and has drawn interest from potential bidders such as KKR, the buyout giant.
While an outright sale of NBTY, which could fetch in the region of $6bn, remains an option for Carlyle, it is now soliciting bids for the individual parts of the group.
Splitting NBTY would have a number of tax implications, with some City sources indicating that it could trigger a tax charge running to hundreds of millions of pounds.
Holland & Barrett trades from nearly 1,400 stores in 16 countries, with nearly half of its wholly owned outlets located in the UK.
Based in Warwickshire, Holland & Barrett employs about 350 people at its headquarters and thousands more across its shops.
(Source: Sky News)