The company has spent more than a decade diversifying away from beer into supermarkets, convenience stores, food and beverages. What has changed that can justify a complete exit from these now?

Yes, China's economic figures have not been good and the retail industry has been hard hit. But less than a year ago, CRE was optimistic enough to acquire Tesco's HK$1.7 billion loss-making China business for HK$10 billion. In the meantime, retail chains are hot, thanks to the dreams of a happy marriage between online sales and stores.

Less than a year ago, 25 domestic and international institutional investors paid 107 billion yuan for a 30 per cent stake in Sinopec's loss-making petrol station and store network.

Why exit when others are elbowing in? Price is normally the justification. Yet the HK$28 billion offered is far from attractive.

Let's assume that the value of household brands such as C'estbon and Ng Fung Hong owned by its food and beverage business are zero and focus only on its supermarket and convenience store business.

Let us also ignore the fact that Sinopec is selling its petrol stations and shops at HK$1.4 million each, compared to the HK$580,000 per store CRE will be getting from its parent. Let us look at CRE's own numbers. In May last year, the company formed a joint venture with Tesco by way of injecting its retail business.

Tesco's 20 per cent holding in the joint venture was valued at £1.2 billion early last year, according to Tesco's latest financial report. That puts the value of CRE's 80 per cent holding in the same entity, which largely came from its retail business, at HK$56 billion.

The offer price of HK$28 billion is only half of that. How can it be justified in less than a year?

Besides, the sale will bring CRE a HK$6.8 billion loss because the price is below book value. State enterprises are rarely allowed to sell assets below book value. Why is it so desperate?

One likely explanation: let us jump before the boat sinks. In this case, the possible hole on the vessel is Tesco China, which was acquired in May last year.

If that is indeed the case, what did management miss in its due diligence into the acquisition of Tesco? Who should be responsible for the mistake?

If not, why should CRE sell its retail business to its parent at a low price? Is that to facilitate the listing of the latter, which holds mainly pharmaceutical businesses?

Or does it have something to do with the clan cleansing following the arrest of Song Lin, the chairman of China Resources Holding, and various senior officials?

The board has expressed no view on the offer yet. Its four independent directors have to make the call. Among them are Executive Councillor Bernard Chan, accountant Eric Li, retired government official Gordon Siu and Houang Tai Ninh.

Each of them was involved in the Tesco investment. The above question is not easy for them to answer. Perhaps that is why the parent company has thrown CRE shareholders the stick and carrot.

Once the deal is done, CRE will pay an HK$11.50 per share special dividend and the parent company will acquire a 10 per cent stake at HK$12.70 per share.

It doesn't matter that the parent company will need the special dividend to pay off 60 per cent of the acquisition. The offer boosted CRE's share price to above HK$24 from about HK$15.

If the shareholders choose to say no, everything will be back to the old shape. The losses would increase as the retail business would take some time to restructure, the state-owned parent said.

In short, the state is the saviour. Don't ask, have faith and you will be saved.