Tesco to sell Thai and Malaysian divisions in £8bn deal

UK supermarket giant Tesco has agreed a deal to sell its Asian operations in Thailand and Malaysia in a £8bn deal.

The portfolio of over 2,000 stores under the Tesco and Lotus brands has been acquired by Thai conglomerate CP Group.

The board of Tesco said it intends to return £5bn to shareholders via a special dividend with associated share consolidation. It also said the money would be used to reduce “indebtedness” through a £2.5bn pension contribution and eliminate its current “funding deficit” and “significantly reduce” the prospect of having to make further pension deficit contributions in the future.

The disposal has been “unanimously agreed” by the Tesco board however the completion of the deal is conditional on Tesco shareholder approval and customary regulatory approvals in Thailand and Malaysia. It is expected to be completed during the second half of 2020.

Dave Lewis, Tesco CEO, said: “Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia. This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders.

“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.”