Analysts at Oak Stone Limited have reported that the U.K. supermarket group Tesco has agreed to sell its business units in Thailand and Malaysia to Thai billionaire and owner of C.P. Group, Dhanin Chearavanont.
“Tesco will return $6.6 billion of the proceeds from this sale to its shareholders, with the deal generating $10.6 billion for the retail giant,” reported Michael Pearson, Head of Corporate Equities at Oak Stone Limited. “The deal is subject to the approval of the company shareholders and regulatory approvals in Thailand and Malaysia, expected in the second half of 2020,” Mr Pearson added.
Early on Monday, Tesco shares dropped as much as 4.1 per cent in the wake of a wider global stock selloff. During the last 12 months, the shares have risen by about 2%.
After receiving interest for the assets, Tesco announced a strategic review back in December last year. People who are familiar with the situation had said the company could sell for over $7 billion.
“We believe that Tesco is exiting the Thai and Malaysian marketplace as the coronavirus continues to impact the retail industry. The cash gained from the sale will then further support the company as it cuts thousands of jobs in an attempt to restructure its core business in the U.K.,” reported James Burnley, Head of Wealth Management at Oak Stone Limited.
Throughout Thailand and under the brand name Tesco Lotus, the U.K. supermarket group has over 2000 hypermarkets and convenience stores alone, which was originally founded by the Thai company C.P. Group in 1994 and later taken over by the British retailer. According to its annual report, Tesco also owns over 70 outlets across Malaysia.
It is also believed that the Thai company Central Group, owned by the Chirathivat family were also interested in the purchase.
“The sale of the Tesco Asia business units comes as the company’s CEO Dave Lewis prepares to handover to Ken Murphy, former Walgreens Boots Alliance executive. The sale will continue the U.K. retail giants withdrawal from international markets, following additional disposals in South Korea, China and the U.S. In addition, Tesco will also have to weigh up options for its Polish business units,” further reported Oak Stone Limited’s, James Burnley.
