With an arrangement that values the business at $10.58 billion, Tesco has struck a deal to sell its Malaysia and Thailand assets to entities of CP Group. The move will enable the company to focus on producing shareholder returns and cash from its United Kingdom, Central Europe and Ireland markets, The Wall Street Journal reported.
At the tail end of 2019, Tesco had begun looking at options for its Malaysia and Thailand businesses, including the potential for sales. Tesco Lotus has approximately 74 locations in Malaysia and 2,000 locations in Thailand.
Tesco said the deal’s net cash proceeds will arrive at $10.3 billion, prior to taxes and other charges. The arrangement still must receive approval by regulators in Malaysia and Thailand. Tesco said it plans to give back $6.52 billion to shareholders via a special dividend with "associated share consolidation," per the report.
The grocer has left markets such as the U.S., South Korea and Japan, and also relinquished some control of its Chinese operations as of 2011. It is currently engaged in a price war with discount grocers and eCommerce rivals, such as Ocado Group PLC and Amazon.com Inc. in the U.K.
CP Group, for its part, has holdings in consumer goods, telecommunications and pharmaceuticals, as well as property development.
In February, news surfaced that Tesco had finished its exit from China with the $357 million sale of its joint venture portion to China Resources Holdings (CRH), a state-run partner. The British grocer had created the Gain Land venture with CRH in 2014, joining together the 131 locations of the U.K. group in China with almost 3,000 of its partner’s locations. It was said that the disposal of the stake would allow the British grocer to simplify and focus on core operations, with proceeds going toward general corporate purposes.