In Brief

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.

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.

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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.

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