Tesco selling businesses in Thailand and Malaysia for 10.6 billion dollars | Progresiv
Tesco has agreed to sell its chains in Thailand and Malaysia to Thai conglomerate CP Group in cash deal worth 10.6 billion dollars (8.2 billion pounds). 
The move comes just three months after Tesco revealed that it had launched a review of its Asia unit, which operates nearly 2,000 stores in Thailand and 70 in Malaysia.
Following the completion of the disposal, Tesco intends to return about 5 billion pounds to its shareholders via a special dividend. The group added that the disposal will further “de-risk” its business by reducing indebtedness through a 2.5 billion pounds pension contribution that, along with other measures, is expected to eliminate a current funding deficit.
The deal has been unanimously approved by Tesco’s board, although it will be conditional on approvals by shareholders and competition regulators in Thailand. This is expected during the second half of this year.
Dave Lewis, Chief Executive of Tesco, said: “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.”
Tesco recorded poor performance in its Asia division last year, with turnover falling 4.1% to 4.87 billion pounds and like-for-likes plummeting 6.2%. Operating profits were also down 6.7% to 286 million pounds, held back by the weak sales and investment in prices, promotional activity, and changes to the sales mix.
CP Group is Thailand’s largest private company and one of the world’s major conglomerates with retail, telecoms, property, food, and pharmaceutical operations. It already operates more than 10,000 7-Eleven convenience stores in Thailand as well as the country’s biggest cash & carry chain Siam Makro.
To focus on combating the discounters and online rivals in its domestic market, Tesco has been shrinking its activities overseas in recent years. Since 2011, it has exited markets including the US, Turkey, Japan, South Korea, and China.
The group said that it would now focus on driving returns from its businesses in the UK and Ireland, and in Central Europe. Any leftover cash from the deal could be used to improve its operations and competitiveness in the UK. (www.kamcity.com)
