Tesco mulling over sale of businesses in Malaysia, Thailand

Long queues at Tesco Shah Alam in Selangor on Aug 30 last year. Tesco's Malaysian business started in 2002 and has 74 stores.
Long queues at Tesco Shah Alam in Selangor on Aug 30 last year. Tesco's Malaysian business started in 2002 and has 74 stores. ST FILE PHOTO

LONDON • Britain's biggest supermarket chain Tesco yesterday said it had started a review of its businesses in Thailand and Malaysia, including looking at a possible sale.

Tesco said in a statement 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".

It said the evaluation was at an early stage and "there can be no assurance that any transaction will be concluded", adding that "a further announcement will be made if and when appropriate".

A sale could value those operations at up to US$9 billion (S$12.2 billion), The Wall Street Journal reported, quoting people with knowledge of the plans.

The newspaper said Tesco, one of the world's largest grocery chains, is potentially working with an adviser for a sale of the assets. One of the people said Tesco could start a sale process early next year.

Tesco Thailand was launched in 1998 and has 1,967 stores, while the Malaysian business started in 2002 and has 74 stores, according to Bloomberg News.

Together, they account for almost a third of the group's global network of around 6,270 stores. Tesco has said it is targeting rapid expansion in Thailand, with goals to build 750 express stores within three years.

For the last fiscal year, its total sales in Asia - where it operates Tesco Lotus in Thailand and Tesco hypermarkets and smaller Tesco Express convenience stores in Malaysia - were down 1.6 per cent, after excluding sales tax and fuel.

The firm reported it achieved £818 million (S$1.46 billion) in annual sales in Malaysia and £4.06 billion in Thailand, said Inside Retail Asia. Tesco Asia's operating profit for the year slipped by 4.3 per cent to £286 million, it added.

In its half-year results published in October, Tesco said its Thailand and Malaysia operations reported combined sales of £2.6 billion, while operating profit jumped by 54.1 per cent to £171 million, British newspaper City A.M. reported.

In October, the company also announced that chief executive Dave Lewis will step down next year after leading a turnaround of the brand.

Tesco unveiled plans in August to cut 4,500 jobs across its 153 Metro stores in the United Kingdom.

Industry data released last month showed all of Britain's big four grocers - market leader Tesco, Sainsbury's, Asda and Morrisons - losing market share to German-owned discounters Aldi and Lidl.

REUTERS

• With additional information from The Straits Times

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A version of this article appeared in the print edition of The Straits Times on December 09, 2019, with the headline Tesco mulling over sale of businesses in Malaysia, Thailand. Subscribe