BRITAIN’S biggest retailer Tesco has completed its exit from China with the sale of a 20 per cent stake in a joint venture to a unit of its state-run partner China Resources Holdings (CRH), raising £275 million.
Having struggled to crack the Chinese market, Tesco established the Gain Land joint venture with CRH in 2014, combining its 131 stores in China with its partner’s almost 3,000.
The retail giant said in a statement on Tuesday (25): “Tesco PLC (Tesco) today announces the sale of its 20 per cent share in Gain Land to a subsidiary of its joint venture partner, China Resources Holdings (CRH). Gain Land is the Chinese joint venture with CRH that was established in 2014. The disposal will result in net cash proceeds to Tesco of c.£275m which will be used for general corporate purposes.”
The transaction will complete on February 28. There are no conditions to closing or regulatory approvals required, according to the British business.
The disposal allows Tesco to further simplify and focus the business on its core operations, it said, adding that the proceeds will be used for general corporate purposes.
After costly exits from Japan and the US and the sale of its South Korean business, Tesco signaled in December a further retreat from its once lofty global ambitions by starting a review of its remaining Asian businesses, which could result in a sale of its operations in Thailand and Malaysia.
If Tesco does quit Thailand and Malaysia, its only overseas operations, apart from Ireland, will be its central European division, consisting of stores in the Czech Republic, Hungary, Poland and Slovakia.
The Asian exit could be one of the last acts of Tesco’s CEO since 2014, Dave Lewis, who will be succeeded by Ken Murphy in October.