Tesco to sell Thailand and Malaysia operations for £8.2bn

The UK’s largest retailer, Tesco, announced this morning (9 March) that it has reached an agreement to sell its Thai and Malaysian businesses.

A deal worth £8.2 billion has been agreed, which would see Thai conglomerate CP Group take ownership of the grocer’s Asian division which generated £4.87 billion in revenue and £236 million in profit last year.

Some £5 billion from the proceeds of the sale will be returned to shareholders via a special dividend, according to the Tesco board. The disposal of the Asian business has been unanimously agreed by the board, but the completion of the sale – which is expected in the second half of 2020 – is conditional to shareholder and regulatory approval.

Tesco views the move as a way to further simplify its group, with the key focus on maintaining its market leading share in UK grocery and growing operations on its home turf. Tesco still operates a business outside the UK, in central Europe.

Dave Lewis, Tesco CEO, who is set to leave the business later this year, said the sale came after “inbound interest and a detailed strategic review of all options”.

“This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders,” he added.

“I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business. I am confident that the agreement we have reached with CP Group presents an exciting opportunity for their continued success."

Tesco began operating in Thailand in 1998 through Ek-Chai, which operates under the name Tesco Lotus, a network of 1,967 stores shops comprising various formats, as well as an online shopping platform, and third-party applications including Lazada and Happy Fresh. It serves over 13 million customers each week.

The UK retailer began life in Malaysia under the name Tesco Malaysia in 2002, as part of a joint venture with Sime Darby Berhad. Tesco Malaysia has 68 stores.