Tesco first proposed a sale of its businesses in Thailand and Malaysia in March

Tesco first proposed a sale of its businesses in Thailand and Malaysia in March

UK supermarket chain Tesco Plc expects to complete the US$10.6bn sale of its businesses in Thailand and Malaysia next week in a move it says will enable a stronger focus on its retail businesses across Europe. 

In a statement this morning (9 December), Tesco says buyer CP Group has now reviewed and is satisfied with the formal notice of approval from the Office of Trade Competition Commission in Thailand.

This, combined with the approval received from the Ministry of Domestic Trade and Consumer Affairs in Malaysia on 10 November, means there are no further conditions outstanding and the disposal is expected to complete on or around 18 December.

"This sale allows us to focus on our businesses across Europe and to continue delivering for customers, make a significant contribution to our pension deficit and return value to shareholders," says CEO Ken Murphy.

Tesco intends to return about GBP5bn of the net proceeds to shareholders via a special dividend, together with a share consolidation, and will also make a contribution of GBP2.5bn to the Tesco PLC Pension Scheme shortly following completion. 

The special dividend is expected to be paid on or around 26 February, conditional on obtaining shareholder approval at a general meeting, which is expected to be held on or around 11 February.

News of the sale was first announced in March with the supermarket chain saying it will be a "significantly more focused business" following completion, with the leading market position in the UK and Ireland.

Tesco began operating in Thailand in 1998 through Ek-Chai, which operates under the name 'Tesco Lotus', and in Malaysia in 2002 under the name Tesco Malaysia as part of a joint venture with Sime Darby Berhad. As per August 2019, Tesco Lotus operated 1,967 stores across Tesco Thailand, while Tesco Malaysia operated a network of 68 stores.

Tesco Lotus Thailand stores and Tesco Malaysia stores are both understood to stock the supermarket's F&F clothing line.

The sale follows an announcement in June that Tesco is to sell its Polish business to Danish retailer Salling Group in a GBP181m deal that will allow it to focus its operations in Central Europe on the Czech Republic, Hungary, and Slovakia.

Tesco posted a 7.6% rise in like-for-like sales at its UK stores for the first half of the year but said clothing sales fell by more than 17%.