As Tesco remains quiet on rumors that it is looking to offload its Czech and Slovak networks, news broke that the troubled UK retailer has sold its South Korean business, Homeplus, for GBP 4.2bn. The company plans to use the funds from the sale to pay off its debts and revitalize its UK network which is facing rising competition from discount retailers. Homeplus was purchased by MBK Partners in partnership with a Canadian pension fund and Temasek Holding. The deal is expected to close at the end of the year. The Homeplus network includes 140 hypermarkets, 375 supermarkets and 327 convenience stores.
“This sale realizes material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet,” said Dave Lewis, Tesco’s chief executive. Tesco reported a pre-tax loss of GBP 6.4bn in the fiscal year ending in February, up from GBP 2.26bn 12 months earlier. The company’s debt currently stands at GBP 17bn.
“The chief executive of Tesco has been hunting for bits of the business he can sell ever since arriving at the beleaguered supermarket last year,” said BBC business editor Kamal Ahmed. “He needed to get rid of assets to fend off speculation that the supermarket’s debt – which was standing at over GPB 20bn – was becoming a problem. The South Korean sale goes some way to alleviating the business’s balance sheet strain. Speculation was growing that without significant sell-offs Tesco might need to raise fresh capital from shareholders – never a happy prospect.”
