BY Fraser Tennant
In a deal which will see the return of $6.6bn to its shareholders, supermarket giant Tesco is to sell its businesses in Thailand and Malaysia to Bangkok-based conglomerate Charoen Pokphand Group for $10.6bn, including debt.
The sale of its Malaysian and Thai assets will simplify the Tesco Group, enabling a stronger focus on its retail businesses in the UK, Ireland and Central Europe. The transaction also generates substantial value for Tesco’s shareholders and allows the Group to further de-risk by reducing indebtedness through a pension contribution of £2.5bn.
Over the last four years Tesco’s performance has significantly improved – particularly within the UK, its largest and most important market – but also across the wider Tesco Group. It is from this strengthened position that the Tesco board decided to respond to the expressions of interest it received for its businesses in Thailand and Malaysia and unanimously concluded that the offer by Charoen should be recommended to shareholders.
Operating across many industries ranging from industrial to service sectors, which are categorised into eight business lines covering 13 business groups, Charoen currently has investments in 21 countries and economies.
"Following inbound interest and a detailed strategic review of all options, we are announcing the proposed sale of Tesco Thailand and Tesco Malaysia,” said Dave Lewis, chief executive of Tesco. “This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders. I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business.”
Subject to customary regulatory approvals in Thailand and Malaysia, the transaction is expected to be completed during the second half of 2020.
Mr Lewis concluded: “I am confident that the agreement we have reached with Charoen presents an exciting opportunity for their continued success."
News: Tesco plans $6.6 bln shareholder return from Thai, Malaysia sale