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Hong Kong conglomerate Hutchison Whampoa Ltd has confirmed that it has signed a deal with Shanghai WhiteCat Group Co Ltd, the domestic provider of household cleaning products.
Laura Cheung, a spokeswoman for the Hong Kong firm, told China Daily yesterday that the two parties had reached a deal over the sale of part of the Shanghai firm. The transaction is currently being approved by the mainland government.
She declined to release details of the amount of money involved in the deal or when it will be finalized.
But Chinese business newspaper 21st Century Business Herald says that Hutchison Whampoa will spend over 100 million yuan (US$12.38 million) to buy 70 percent of WhiteCat.
If the deal is finalized, the existing two shareholders of the Shanghai firm, WhiteCat and Hong Kong-based Sun Hung Kai, will respectively hold 20 and 10 percent of the firm, according to the report.
An anonymous official with WhiteCat said the Shanghai firm will still produce goods under the WhiteCat brand, but will transfer operation and property management rights to Hutchison Whampoa.
Officials from WhiteCat declined to comment.
Some insiders believe that Hutchison Whampoa, which is involved in areas as diverse as real estate and finance, is interested in the property owned by WhiteCat.
The Shanghai company's manufacturing base is in a prime location and is worth at least 100 million yuan (US$12.38 million).
Only a couple of weeks ago, Hong Kong business tycoon Li Ka-shing, the owner of Hutchison Whampoa, spent 4.5 billion yuan (US$557 million) on two properties in Shanghai's Pudong New District.
But other analysts suggest that Hutchison Whampoa wants to return to the household cleaning industry.
Seven years ago, the Hong Kong giant linked up with the world's largest personal care provider, Procter & Gamble (P&G), and helped the US firm get started in China.
Hutchison Whampoa set up a joint venture with P&G, which makes and distributes hair and skin-care products.
At that time, the two groups agreed on an option to allow the US firm to buy out Hutchison Whampoa's stake in the venture in the future.
Following P&G's rapid rise in China, it bought shares in the joint venture from Hutchison Whampoa in 1994 and 2004.
The Hong Kong company in total accepted US$2.4 billion from P&G and therefore withdrew from the industry.
This time, Hutchison Whampoa's purchased of WhiteCat could allow it to start again in the household cleaning sector.
WhiteCat manufactures and sells household cleaning products under the brands WhiteCat and Jiamei.
The firm was once one of the largest household cleaning brands. In 1994 it had 11 percent of the market on the mainland. Its detergent occupied more than half of the market.
However, following fierce competition and skyrocketing oil prices, the domestic company has experienced huge losses in the last five years.
For the last two years, WhiteCat has been seeking capital. China Petrol and German firm Henkel were rumored to be involved in a takeover of the firm.
(China Daily December 6, 2005)
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