12th Apr 2016 10:21
LONDON (Alliance News) - Grocer Tesco PLC on Tuesday said it has agreed to sell just over half its stake in e-commerce platform Lazada Group SA ahead of an expected renewed flurry of asset sales by the group as it works to return itself to health.
Tesco will sell Lazada to China's Alibaba Group Holding Ltd for USD129.0 million in cash. Lazada is an e-commerce platform for local and international sellers and brands in South East Asia. Following the deal, Alibaba will be its controlling shareholder.
Tesco first invested in Lazada in November 2013 and had held a 19.6% stake in the business prior to the sale to Alibaba. Its remaining stake in Lazada will be 8.3%.
In addition, Tesco and other shareholders in Lazada have entered into a put-call arrangement with Alibaba which will give the Chinese group the right to acquire the rest of Lazada at a fair market value within 12 to 18 months following the closing of the deal.
Tesco intends to use the proceeds from the sale for general working capital purposes.
The move comes a day ahead of Tesco's annual results, at which it is expected to announce a series of further non-core asset disposals. Tesco is expected to sell its Dobbies Garden Centres, its Harris & Hoole coffee shops and its Giraffe restaurants.
In September last year, Tesco sold its Homeplus business in South Korea to a private equity-led consortium for GBP4.24 billion and, prior to that, closed down or sold all its Blinkbox businesses and its Tesco broadband unit. It also put corporate jets up for sale.
Under Dave Lewis, who took over as chief executive in 2014, Tesco has embarked on a significant restructuring to sell some of the businesses it had acquired as a way to diversify away from its core UK grocery operations during a period of rapid expansion. Lewis has cut costs, closed unprofitable stores, and cut both spending plans and Tesco's dividend in an attempt to shore up its balance sheet.
This strategy is being pursued at a difficult time for the big UK grocers, comprising Tesco and rivals J Sainsbury PLC, Wm Morrison Supermarkets PLC and Asda Ltd, owned by US giant Wal-Mart Stores Inc. All four have been forced to cut prices to try to ward off the increasing challenge posed by German discounters Aldi and Lidl, who have been winning market share at a significant pace since starting to aggressively expand in the UK market.
By Sam Unsted; [email protected]; @SamUAtAlliance
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