Tesco sells Asia units for US$10 billion to Thai billionaire

Geneva

TESCO plc agreed to sell its businesses in Thailand and Malaysia to Thai billionaire Dhanin Chearavanont for more than US$10 billion and will return almost two-thirds of the proceeds to shareholders.

Britain's largest supermarket chain plans a £5 billion (S$9.08 billion) special dividend after agreeing to sell the assets to Chearavanont's Charoen Pokphand Group. The deal will generate cash proceeds of £8 billion, the grocer said.

Tesco shares fell as much as 4.1 per cent early on Monday in London amid a broader global stock selloff. Over the past 12 months, they've risen about 2 per cent.

The company is exiting Thailand and Malaysia as the Covid-19 outbreak snarls the retail industry. Tesco is also gaining a cash infusion that will support it as it cuts thousands of jobs in an attempt to restructure its core UK business. Tesco said the deal will eliminate its pension deficit.

Tesco announced a strategic review of the unit in December after receiving interest for the assets. People familiar with the situation had said the businesses could fetch more than US$7 billion.

Tesco has more than 2,000 hypermarkets and convenience stores in Thailand under the Tesco Lotus brand. The chain was founded by CP Group in 1994 and later taken over by the British company. In Malaysia, Tesco has more than 70 shops, according to its annual report. Malaysian conglomerate Sime Darby Bhd owns a 30 per cent stake in Tesco Malaysia.

Central Group, controlled by the Chirathivat family, was also interested in the purchase, Bloomberg has reported.

The sale comes as Tesco chief executive officer Dave Lewis prepares to hand over to former Walgreens Boots Alliance Inc executive Ken Murphy.

It continues the UK grocer's retrenchment from international markets, after disposals in the US, South Korea and China. Tesco has also been weighing options for its Polish business. BLOOMBERG