Tesco to sell Thai and Malaysian business in £8.2bn deal

The grocer’s deal to sell its Thai and Malaysian businesses is set to complete in the latter half of this year, with proceeds from the sale earmarked to pay a one-off £5bn dividend to shareholders alongside £2.5bn to plug the grocer’s pension deficit.

CP Group will own 86.9% of the grocer’s Thai subsidiary and 100% of its Malaysian business following completion of the acquisition.

Tesco chief executive Dave Lewis said the deal, which makes central Europe the grocer’s only significant overseas business, will “further simplify and focus the business”.

Thai business conglomerate CP Group operates in industries ranging from industrial to service sectors across 21 countries.

The business titan beat competition from other potential suitors including Thai billionaire Charoen Sirivadhanabhakdi to secure this deal with Tesco, who put its Thai and Malaysian business division on the market after receiving inbound interest for a potential sale.

Lewis said: “Following inbound interest and a detailed strategic review of all options, we are announcing today the proposed sale of Tesco Thailand and Tesco Malaysia. This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders.

“I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business. I am confident that the agreement we have reached with CP Group presents an exciting opportunity for their continued success.”