CP Group to take over Tesco's business in Thailand, Malaysia for $10 billion
BANGKOK, NNA – CP Group, a major Thai agri-business conglomerate, has won a bid to buy over Tesco's entire shareholding in 2,000 over grocery stores across Thailand and Malaysia for $10.3 billion.
Tesco, which is Britain's largest supermarket chain, chose Thai billionaire Dhanin Chearavanont's CP Group over two other formidable rivals - Thailand’s biggest retail market Central Group Co. and leading beverage group TCC Group Co., according to media reports.
The disposal represents an enterprise value of $10.6 billion on a cash and debt free basis, according to Tesco's statement on Monday.
Tesco wanted to sell its remaining businesses in Asia in a strategic plan to refocus on the growth of its 3,769 stores in Britain and more than 800 stores in Central Europe, the statement said.
“The disposal will simplify the Tesco Group, enabling a stronger focus on its retail businesses in the UK and Ireland and in Central Europe," said Tesco in the statement. It had already sold off its businesses in South Korea and China.
On its final disposal in Asia, Tesco added, "It will also enable the Group to return significant proceeds to shareholders, with 5 billion pounds ($6.5 billion) expected to be returned via a special dividend, and to further de-risk the business by reducing indebtedness through a significant pension contribution of 2.5 billion pounds.
Tesco's businesses in both Southeast Asian countries have been profitable. It began operating in Thailand in 1998 through subsidiary Ek-Chai, which operates under the name “Tesco Lotus”, a network of stores comprising various formats across Tesco Thailand as well as an online shopping platform and third-party applications such as Lazada and Happy Fresh, the statement said.
Tesco then moved into the Malaysian market in 2002 under a joint venture with Sime Darby Berhad to run Tesco Malaysia stores, it said.
Charoen Pokphand Group, which currently operates 12,000 7-Eleven convenient stores and 80 wholefood retailers under Siam Makro Public Co., will control 1,967 Tesco stores in Thailand and 68 of its stores in Malaysia as of Aug. 24, 2019, according to Tesco's statement on Monday.
The transaction is subject to Tesco’s shareholder and country regulatory approvals in the second half of 2020.