Tesco takes steps towards $6bn South Korean sell-off
Troubled supermarket hires HSBC to explore options for Asian operations
6:56PM BST 04 Jun 2015
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Tesco has hired bankers at HSBC to work on the potential sale of its South Korean operations, in the first step by the troubled grocer to offload its Asian assets.
Britain’s biggest retailer is understood to have put the Asian business under review as part of a plan to focus on its core UK grocery business which is suffering from intense competition and the aftermath of an accounting scandal.
Industry sources have said the South Korean operations could be valued at around $6bn (£3.8bn), according to Reuters, which first reported HSBC’s appointment.
Tesco has more than 400 stores in South Korea under the Homeplus brand, as well as substantial operations in Thailand and Malaysia.
There has been intense speculation that Dave Lewis, who has been overhauling the business since joining last year as chief executive from consumer giant Unilever, could offload the South Korean business to fund a turnaround of the UK.
Analysts have previously suggested that Tesco could spin-off its Asian operations and list them as a separate company that could be worth between £8bn and £10bn.
Seven years ago Tesco’s then chief executive Terry Leahy identified South Korea as a key area for growth and pressed firmly ahead with an expansion plan which saw it spending nearly £1bn buying a chain of supermarkets. The supermarket chain first entered the region in 1999 following a deal with Samsung.
Private equity firms such as KKR, Carlyle, CVC and TPG as well as Asian buyout firms including Seoul-based MBK Partners could be interested bidders in the South Korean business.
A potential sale of the South Korean business comes after Tesco reported the biggest ever loss in British retail history in April and suffered its credit rating being cut to junk status by Moody’s and S&P at the start of the year.
Tesco is also working with bankers at Goldman Sachs to drum up interest in its customer data business Dunhunmby. Sir Martin Sorrell's WPP has entered the running for the unit alongside private equity suitors. The supermarket declined to comment.
Tesco is also working with bankers at Goldman Sachs to drum up interest in its customer data business Dunhunmby. Sir Martin Sorrell's WPP has entered the running for the unit alongside private equity suitors. The supermarket declined to comment.
