Tesco sells South Korean unit for more than £4 bn

Chief executive Dave Lewis said the sale process had been “highly competitive”, adding: “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”.

Bloomberg’s article last Tuesday reported that Tesco’s South Korean business is considered its Asia’s “crown jewel”, valued at 4 billion pounds, surpassing Dunnhumby valuation at 1.6 billion pounds, as estimated by the Credit Suisse Group AG two months ago.

Tesco is seeking to raise funds to cut debt and focus on its troubled domestic business. It closed 43 unprofitable United Kingdom stores in April.

The disastrous result followed an accounting scandal previous year when Tesco admitted overstating its profit forecasts.

Tesco said the deal was worth £4.24 billion on a debt-free basis, or £4 billion in cash.

Mr. Monteyne noted that the sale will help Tesco return to investment grade rating a year earlier than it otherwise could have.

It marks the biggest deal in the country’s merger and acquisition history. In 2014, US giant Safeway Inc. agreed to merge with Albertsons, which is owned by a group led by USA private-equity firm Cerberus Capital Management LP.

Homeplus has 140 hypermarkets, 375 smaller supermarkets and 327 convenience stores across South Korea.

The Asian private equity firm has partnered with the Canadian Pension Plan Investment Board and Singapore’s Temasek Holdings for the takeover. Ltd.as well as Canada Pension Plan Investment Board, which is buying a 21.5% stake in Homeplus for $534 million as part of the deal.

The sale will mark the end of one of Tesco’s more successful foreign experiments and signal a further step away from the globe-spanning ambitions of former boss Sir Terry Leahy.