Britain

Tesco weighs potential £7bn sale of Asia grocery chain

Tesco PLC (LON:TSCO) is mulling whether to sell its last remaining Asian supermarket businesses.

The FTSE 100 grocer said it had received “inbound interest” about its grocery chains in Thailand and Malaysia, and was now carrying out a review of options.

READ: Tesco boss Dave Lewis announces shock departure

“The evaluation of strategic options is at an early stage, no decisions concerning the future of Tesco Thailand or Malaysia have been taken, and there can be no assurance that any transaction will be concluded,” the company said.

Asia generated £4.9bn of sales from the Tesco Lotus chain of over 2,000 stores in the past financial year, with £286mln of operating profit for the group coming at a profit margin around double the UK business.

The group said in the summer that Thailand was a key part of its future growth, with management aiming to underscore its leading market position in the market through the opening of around 750 convenience stores over the next three to four years.

A price of US$9bn (£6.8bn) has been suggested in reports, which would eclipse the sale of Tescos South Korea business for US$6bn in 2015 and an ignominious exit from Japan a few years earlier.

The decision of whether or not to sell will comes just over two months after the group's chief executive Dave Lewis revealed he was leaving next summer, with Walgreens Boots Alliance chief operating officer Ken Murphy poached to be his replacement.

"Will need to be knock-out price"

Tesco shares rose 5% to 244.4p in early trade on Monday.

Broker Shore Capital said "for any approach to be accepted by the Tesco Board for Thailand then it needs to be highly attractive if not a knock out price" as Asia and Thailand, in particular, is a "jewel in Tesco's crown".

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