Tesco, the largest supermarket chain in the United Kingdom, announced on March 9 that it will sell all retail store holdings in Thailand and Malaysia to the Charoen Pokphand Group (CP) for $10.6 billion (about £8.2 billion). The deal includes approximately 200 Tesco Lotus hypermarkets and 1,600 Tesco Lotus Express convenience stores in Thailand, in addition to 74 shops in Malaysia.
The Bangkok-headquartered buyer, a family-owned conglomerate engaged in agribusiness, food production, retail and distribution enterprises, owns 12,000 7-Eleven convenience stores and approximately 80 Siam Makro cash-and-carry outlets in Thailand. The purchase, if approved by regulatory authorities as expected during the second half of this year, will see CP reacquire assets it sold to Tesco during the 1998 Asian financial crisis.
Net cash proceeds of the sale will amount to $10.3 billion (equivalent to £8.0 billion) before tax and other transaction costs. Upon completion of the transaction, Tesco intends to return about £5 billion to shareholders via a special dividend with associated share consolidation.
Disposal of operations in Thailand and Malaysia will “further de-risk the Tesco business by reducing indebtedness through a £2.5 billion pension contribution that, along with other measures, is expected to eliminate the current funding deficit and significantly reduce the prospect of having to make further pension deficit contributions in the future,” according to a statement issued by the company.