Tesco completes China exit with 275 million pound stake sale

[snoop1130]

Tesco completes China exit with 275 million pound stake sale

 

FILE PHOTO: A Tesco sign outside one of the supermarket group's stores in Altrincham, northern England, April 16, 2016. REUTERS/Phil Noble

 

LONDON (Reuters) - Britain’s biggest retailer Tesco (TSCO.L) has completed its exit from China with the 275 million pound sale of its joint venture stake to state-run partner China Resources Holdings (CRH).

 

Having struggled to crack the Chinese market, Tesco established the Gain Land venture with CRH in 2014, combining the British group’s 131 stores in China with its partner’s almost 3,000.

 

The disposal of its 20% stake allows Tesco to further simplify and focus the business on core operations, it said on Tuesday, adding that the proceeds will be used for general corporate purposes.

 

The deal is scheduled to complete on Feb. 28.

 

Shares in Tesco were up 0.7% at 0816 GMT, extending its gains over the last year to 12.4%.

 

“This extra 275 million pounds of ‘forgotten value’ should be accretive to most street valuations,” said Bernstein analyst Bruno Monteyne.

 

After costly exits from Japan and the United States and the sale of its South Korean business, Tesco signalled in December a further retreat from its once lofty global ambitions by starting a review of its operations in Thailand and Malaysia - its last remaining wholly owned businesses in Asia.

 

A sale of its operations in Thailand and Malaysia would mean Tesco’s only remaining overseas operations, apart from Ireland, would be its central European division, comprising stores in the Czech Republic, Hungary, Poland and Slovakia.

 

The Asian exit could be one of the last acts of Tesco CEO Dave Lewis, who will be succeeded by Ken Murphy in October.

 

Bernstein’s Monteyne expects Tesco to start a 1 billion pound share buyback programme in its 2020-21 financial year.

 

“With this transaction and the possible sale of Thailand and Malaysia, Tesco’s biggest short-term concern could be how to efficiently return cash to shareholders,” he said.

 

-- © Copyright Reuters 2020-02-25

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[1Gringo]

I can only hope they stay in (Korat) Thailand.  I was under the impression that they were only selling their mini marts.  guess I was wrong.

[Kinnock]

I must remember this phrase for the next time I totally suck at something:

 

" ..... allows Tesco to further simplify and focus the business on core operations"  ????

 

And in Thailand the future buyer of their stores needs to have the political power to convince the Government to overlook the law relating to monopoly (the prevention of the abuse of market power, not the board game). 

 

So one guess about which of the bidders has this level of influence?

[ThailandRyan]

Wait, wait, now just one minute, your not suggesting the overloards of Asia, OMG.  Now where ave all the choices gone....

[Burma Bill]

5 hours ago, 1Gringo said:

I can only hope they stay in (Korat) Thailand.  I was under the impression that they were only selling their mini marts.  guess I was wrong.

Sorry, yes! The whole lot from Express shops to Hypermarkets are under threat.

[Thingamabob]

Appalling decision by Tesco 'management'. They are selling off profitable businesses in Asia to prop up unprofitable businesses in the UK and elsewhere in the west. Put simply, throwing good money after bad.

[natway09]

Big C has much more variety these days anyway

[Burma Bill]

16 hours ago, Thingamabob said:

Appalling decision by Tesco 'management'. They are selling off profitable businesses in Asia to prop up unprofitable businesses in the UK and elsewhere in the west. Put simply, throwing good money after bad.

Just read this morning that Walmart are selling off ASDA and pulling out of the UK due to competition from Amazon, Lidl and Aldi.