- Wednesday, May 01, 2024
By: Radhakrishna N S
THE UK’s biggest retailer Tesco said on Monday (9) that it has agreed to sell its businesses in Thailand and Malaysia to Thai conglomerate CP Group for £8 billion.
Outgoing chief executive Dave Lewis said in a statement: “Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia.”
“This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders.”
The supermarket chain would return £5bn of the proceeds to investors and the deal is set to complete in the second half of this year.
Tesco noted that the divestment will also cut debt and streamline the group, enabling a stronger focus on British, Irish, and central European activities.
The retailer said: “The disposal will further de-risk the Tesco business by reducing indebtedness through a £2.5bn pension contribution that, along with other measures, is expected to eliminate the current funding deficit and significantly reduce the prospect of having to make further pension deficit contributions in the future.”
Tesco completed its exit from China last month with the £275 million sale of its joint venture stake to state-run partner China Resources Holdings (CRH).
The latest disposal will further simplify the Tesco Group, enabling a stronger focus on driving cash generation and returns to shareholders from retail businesses in the UK, Ireland, and central Europe.
Tesco started its operations in Thailand through Ek-Chai in 1998, which operates under the name Tesco Lotus, a network of stores. Tesco Lotus generated £4.1bn in revenue in the financial year to February 2019. It operates a network of 1,9673 stores across Tesco Thailand and serves over 13 million customers each week.
The retailer began operating in Malaysia under the name Tesco Malaysia in 2002, as part of a joint venture with Sime Darby Berhad. Tesco Malaysia generated £800m in revenue last year. It and operates a network of 684 stores across Malaysia.
