Tesco sells South Korean unit to MBK-led group for $6.1bn
Britain's Tesco has agreed to sell its South Korean unit to a group led by private equity firm MBK Partners for $6.1 billion, it said on Monday, in its first major disposal since it hit financial difficulties.
Seeking to raise funds to revitalize its domestic business, Tesco said it would sell Homeplus, its biggest overseas unit, to a group of investors led by MBK and including the Canada Pension Plan Investment Board, Public Sector Pension Investment Board and Temasek Holdings.
The world's third largest retailer has been looking to make disposals after a slowdown in its home market led to a string of profit warnings and the reduction of its credit status to junk.
Tesco said under the terms of the deal it would receive 4 billion pounds ($6.07 billion) in cash. After adjustments for tax and transaction costs, the net cash proceeds will be around 3.35 billion pounds.
Reuters had previously reported that MBK was the preferred bidder for Homeplus, however the involvement of the Canadian Pension Fund was new.
"This sale realizes material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet," said Tesco Chief Executive Dave Lewis.