Tesco sells its retail subsidiary in Thailand and Malaysia for £8bn

Tesco has agreed to sell its southeast Asian operations to Thai conglomerate Charoen Pokphand for £8.2bn in cash. 

Tesco shares escaped the dramatic falls suffered by the rest of the FTSE 100 this week, say John Reed and Jonathan Eley in the Financial Times. That’s because it agreed to sell its southeast Asian operations to Thai conglomerate Charoen Pokphand for £8.2bn in cash. 

This will produce a “lavish” special dividend of £2.5bn; the remainder will be used to eliminate Tesco’s pension deficit. The deal, the biggest in Thailand’s history, sees Tesco return its 2,000 stores in Thailand and 74 in Malaysia to CP Group, who sold its Lotus supermarket group to Tesco for $180m during the Asian crisis.

There’s no doubt that the owner of CP Group “has got his hands on a fine business”, says Ben Marlow in The Daily Telegraph. Of all Tesco’s attempts at expansion overseas, Thailand “was far and away the biggest success”. What’s more, the sale not only represents a U-Turn from Tesco’s plans to add another 750 stores in Thailand, but it also leaves Tesco “focused almost entirely on the UK”, where growth is “elusive”. 

Nonsense, say Clara Ferreira Marques and Nisha Gopalan on Bloomberg. Not only did the Asian business amount to a “modest 9% of Tesco’s total revenue in the first half of last year”, but it also “needed investment” at a time when Thailand’s economy is “flatlining”. 

Tesco also achieved a high price of 12.5 times earnings. The only concern is that Thai regulators may block the deal because it allows CP Group to grab “too much of the market”, so Tesco’s shareholders shouldn’t celebrate “until they get delivery”.

Recommended

Lockdown hammers commercial landlord Hammerson
Property

Lockdown hammers commercial landlord Hammerson

Three quarters of the tenants of shopping-centre operator Hammerson have been forced to close during the lockdown.
21 Jan 2021
The world’s fund managers are getting very bullish – be careful out there
Stockmarkets

The world’s fund managers are getting very bullish – be careful out there

The latest survey of fund managers shows them to be extremely bullish on all the same things. And that, says John Stepek, means the market is in dange…
21 Jan 2021
Five online retail stocks to diversify your portfolio with
Share tips

Five online retail stocks to diversify your portfolio with

Professional investor Tancredi Cordero, founder and CEO of Kuros Associates, selects five of his favourite online retail stocks to buy now.
18 Jan 2021
Why investment forecasting is futile
Investment gurus

Why investment forecasting is futile

Every year events prove that forecasting is futile and 2020 was no exception, says Bill Miller, chairman and chief investment officer of Miller Value …
18 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Prepare for the end of the epic bubble in US stocks
US stockmarkets

Prepare for the end of the epic bubble in US stocks

US stocks are as expensive as they’ve ever been. How can you prepare your portfolio for a bubble bursting?
18 Jan 2021
The best investment trusts to buy for 2021
Investment trusts

The best investment trusts to buy for 2021

Sectors ranging from emerging markets to student accommodation look poised to do well this year, says David Stevenson, as he picks the best investment…
19 Jan 2021