UK retail giant Tesco has agreed to sell its stores in Thailand and Malaysia to Thai conglomerate CP Group for £8 billion.
Tesco will sell its 2,000 stores across Thailand and Malaysia, which operate under the Tesco Lotus brand, for £8 billion to CP Group.
The supermarket chain's chief executive officer (CEO) Dave Lewis pointed out that the sale of the stores would allow Tesco "to further simplify and focus" its business. He added that out of the £8 billion proceeds, £5 billion will be returned to shareholders via a special dividend.
If completed, the sale would leave stores in Ireland and in central Europe, including Poland and Hungary, as the only only other overseas stores operated by Tesco.
The company stated that the sale would reduce its debt and streamline the group, enabling a "stronger focus" on UK, Irish and central European activities.
The proposed sale was unanimously agreed by the Tesco board, but shareholders and regulators still need to give their approval. The deal is scheduled to be finalized in the second half of this year.
The possibility of the sale was first revealed by the company in December when it released a statement saying it had initiated a review of its Asian businesses "following inbound interest" but did not name the potential buyer or buyers.
It also stated that the ongoing review is still at an early stage and "no decisions concerning the future of Tesco Thailand or Malaysia have been taken".
However, the possible sale was threatened in January when Thailand’s Office of Trade Competition Commission, the country’s new anti-competition body, warned that the winning bidder for the Tesco assets could own over half of the supermarkets in the country.
The country’s fair competition rules state that if a merger gives a company more than half of the total market share, it must seek the country’s fair trade commission’s permission. If it fails to do so, it could be fined with not more than 0.5% of the merger’s transaction value.
