Tesco Pulls In £4 Billion From Sale Of South Korea Business - Deal Done

by Benson Agoha | Business

Troubled British Grocer agrees to sell South Korea business in $6 billion (£4bn) deal

UK's biggest High Street Grocer, Tesco has agreed to sell its South Korean business in a deal reportedly worth $6 billion (£4 billion).

The deal agreed today in Seol, the South Korean Capital will see the British retailer sell its South Korean retail business to a locally-led consortium.

According to a report by the Island Packet, the acquisition by South Korean private equity firm MBK Partners and a group of Canadian and Singaporean investors is the largest ever in South Korea and one of the biggest deals in Asia so far this year.

This morning Tesco issued an official statement confirming that it has agreed to sell HomePlus,saying it plans to use the proceed from the sale to reduce its debt, said to amount to £4.2.

The sale, according to Tesco, will result in "significant reduction of £4,225 million in Tesco group’s total indebtedness from net cash proceeds and associated reduction in capitalised lease and other commitments."

When completed in the final quarter of this year, the deal will await two approvals - one from Tesco's shareholders and the from the South Korean government.

Two Canadian pension funds and Singapore state investment company Temasek are part of the consortium. The MBK-led consortium said it will invest 1 trillion won in Homeplus over the next two years.

Tesco, which reported a full-year loss of $8.5 billion through February, has been restructuring its businesses and has closed 43 unprofitable stores in April.

Dave Lewis, Chief Executive of Tesco, said: “After a highly competitive process, we are announcing today the proposed sale of Homeplus, our business in the Republic of Korea. This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet."

"I would like to thank all of our Homeplus colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of a great business. I am confident that the agreement we have reached with MBK Partners presents an exciting opportunity for their continued success.”

* The Island Bucket

Read more here: http://www.islandpacket.com/2015/09/07/3913229_tesco-agrees-to-sell-south-korea.html?utm_campaign=Contact+SNS+For+More+Referrer&rh=1#storylink=cpy