Tesco considering selling central and eastern European unit

Company announces sale of South Korean arm to MBK Partners-led group for $6.1bn

Tesco: the agreement to offload its South Korean business knocks £4.23 billion off total borrowings. Photograph: Rui Vieira/PA Wire

Tesco: the agreement to offload its South Korean business knocks £4.23 billion off total borrowings. Photograph: Rui Vieira/PA Wire

 

Tesco, which announced the sale of its South Korean business on Monday, is also considering divesting its central and eastern European operations to further reduce debt, according to three people familiar with the matter.

While the company is discussing options with advisers, no final decision has been made, said the people, who asked not to be identified as the discussions are private.

The business, valued by Sanford C Bernstein at £1.9 billion, includes more than 1,110 stores that generate £6.45 billion of revenue.

Tesco is selling its South Korean arm to a group led by private equity firm MBK Partners for $6.1 billion, it said, as the British supermarket retreats from foreign markets to focus on reviving its troubled domestic business.

The sale of Homeplus, its largest overseas asset, represents the first large divestment by chief executive Dave Lewis, who has pledged to shore up the company’s finances and regain an investment-grade credit rating.

The agreement to offload its South Korean business knocks £4.23 billion off total borrowings. Yet the figure represents just under one-fifth of the retailer’s indebtedness.

Alongside the Korea sale, Tesco is exploring options for its Dunnhumby data-analytics unit.

– (Bloomberg/Reuters)