9th Mar 2020 08:05
(Alliance News) - Tesco PLC on Monday said it has agreed to sell its Thailand and Malaysia operations to a combination of CP Group entities for USD10.6 billion on a cash and debt free basis.
CP Group entities comprise of CP Retail Development Co Ltd, Charoen Pokphand Holding Co Ltd, CP All Public Ltd Co and CP Merchandising Co Ltd.
The UK supermarket chain said it expects to secure USD10.3 billion upon completion of the transaction, which is expected in the second half of 2020. Tesco also said it will return GBP5.0 billion to its shareholders via a special dividend.
The FTSE 100 grocer said the sale of these south-east Asian businesses will further de-risk its business by reducing indebtedness through a GBP2.5 billion pension contribution that is expected to eliminate the current funding deficit and "significantly" reduce the prospect of having to make further pension deficit contributions in the future.
The disposal will also further simplify Tesco's operations, it said, enabling a stronger focus on driving cash generation and returns to shareholders from its retail businesses in the UK and Ireland and in Central Europe.
"Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia," said Chief Executive Dave Lewis.
"This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders," added Lewis.
The stock was down 3.6% at 231.30 pence in London on Monday.
By Evelina Grecenko; [email protected]
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