Tesco sells Homeplus – the jewel in its crown

Tesco has sold Homeplus, its South Korean unit, to a private-equity consortium led by MBK Partners for £4.2bn.

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One less thing to worry about for Tesco

Tesco has sold Homeplus, its South Korean unit, for £4.2bn. The retailer entered the country in 1999, and is now offloading the so-called "jewel in its crown" to a private-equity consortium led by MBK Partners. It marks Asia's biggest private-equity-backed deal to date. Tesco is grappling with over £20bn of debt (including pension obligations) and last year reported a loss of £6.2bn.

What the commentators said

Tesco's balance sheet was under great strain, said the BBC's Kamal Ahmed. There was talk of a rights issue, "never a happy prospect", and much of the debt had to be paid or refinanced in the next five years. Down-payments were needed to bring about an improvement in the group's credit rating, in turn allowing it to borrow more cheaply. At present, two of the three main credit-ratings agencies consider Tesco's paper "junk".

The price tag looks "fair" given the clampdown on opening hours for big retailers in Korea, reckoned Patrick Hosking in The Times, as well as the recent market jitters. It's one thing less for Tesco's "overstretched management" to worry about as they attempt to fix the British business. Particularly as CEO Dave Lewis still has to show he knows "how to get more customers through the door", said Ahmed.

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.