Tesco weighs up sale of Thai and Malaysian stores
Analysts say the chain would need high price to offload ‘jewel in its crown’
Tesco is considering selling its Thai and Malaysian stores after a recent approach by an unnamed buyer.
A sale would be highly significant because Tesco operates 1,967 stores in Thailand, and another 74 in Malaysia, employing more than 60,000 people.
Between them, the outlets made a profit of £286m in the most recent financial year – about one-fifth of Tesco’s total global profits.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Therefore, says Shore Capital retail analyst Clive Black, any offer is going to have to be a “knockout” price for Tesco to “consider selling”.
Speaking to The Daily Telegraph, Black added: “Thailand in particular is a jewel in their crown and as recently as June, they were talking about expansion there with 750 new convenience stores over the next four years.”
Bernstein analyst Bruno Monteyne agreed, telling Reuters that Tesco’s Thai operation was a “high quality business” and still had significant growth opportunities.
–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––
However, writing for Bloomberg, Andrea Felsted argued that Tesco should “take the money and run”. Felsted said that despite the riches of its Asian wing, the “prices on the shelves of its domestic supermarkets are the key driver of the retailer’s fortunes”.
The BBC reports that Tesco has been “shifting its focus” as part of a turnaround programme launched five years ago. The change in focus has already seen it withdraw from the US, Japan and China.
In a statement, the company said: “Tesco confirms that, following inbound interest, it has commenced a review of the strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses.”
Shares in Tesco were up 5.5% yesterday morning, valuing the retailer at £24bn, as analysts said rival retailers and private equity investors could be interested.
In October this year, Tesco chief executive Dave Lewis announced that he would stand down “in the summer of 2020”, surprising many.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
4 ways to give back this holiday season
The Explainer If your budget is feeling squeezed, remember that money is not the only way you can be generous around the holidays
By Becca Stanek, The Week US Published
-
4 tips for hosting an ecofriendly Thanksgiving
The Week Recommends Coming together for the holidays typically produces a ton of waste, but with proper preparation, you can have an environmentally friendly gathering.
By Theara Coleman, The Week US Published
-
Jussie Smollet conviction overturned on appeal
Speed Read The Illinois Supreme Court overturned the actor's conviction on charges of staging a racist and homophobic attack against himself in 2019
By Peter Weber, The Week US Published
-
Labour shortages: the ‘most urgent problem’ facing the UK economy right now
Speed Read Britain is currently in the grip of an ‘employment crisis’
By The Week Staff Published
-
Will the energy war hurt Europe more than Russia?
Speed Read European Commission proposes a total ban on Russian oil
By The Week Staff Published
-
Will Elon Musk manage to take over Twitter?
Speed Read The world’s richest man has launched a hostile takeover bid worth $43bn
By The Week Staff Last updated
-
Shoppers urged not to buy into dodgy Black Friday deals
Speed Read Consumer watchdog says better prices can be had on most of the so-called bargain offers
By The Week Staff Published
-
Ryanair: readying for departure from London
Speed Read Plans to delist Ryanair from the London Stock Exchange could spell ‘another blow’ to the ‘dwindling’ London market
By The Week Staff Published
-
Out of fashion: Asos ‘curse’ has struck again
Speed Read Share price tumbles following the departure of CEO Nick Beighton
By The Week Staff Published
-
Universal Music’s blockbuster listing: don’t stop me now…
Speed Read Investors are betting heavily that the ‘boom in music streaming’, which has transformed Universal’s fortunes, ‘still has a long way to go’
By The Week Staff Published
-
EasyJet/Wizz: battle for air supremacy
Speed Read ‘Wizz’s cheeky takeover bid will have come as a blow to the corporate ego’
By The Week Staff Published