LONDON, Dec 10 — Shareholders in Tesco can look forward to a GBP5 billion (US$6.7 billion or RM27.2 billion) windfall in the new year after the group said it would complete a US$10.6 billion (RM43 billion) sale of its Asian businesses to Thailand’s CP Group next week.
Tesco agreed to sell its businesses in Thailand and Malaysia to Dhanin Chearavanont’s CP Group in March.
Britain’s biggest retailer said that CP Group, which runs its 12,000 7-Eleven convenience stores through CP All and about 80 cash-and-carry stores under Siam Makro, was satisfied with the approval notice from Thailand’s Office of Trade Competition Commission.
This, plus approval from the Domestic Trade and Consumer Affairs Ministry in Malaysia on November 10, means there are no further conditions outstanding and the disposal is expected to complete on or around December 18.
“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,” said Tesco chief executive officer Ken Murphy.
Tesco plans to return about GBP5 billion (RM27 billion) of the proceeds to shareholders via a special dividend, together with a share consolidation, and will also put GBP2.5 billion (RM13.56 billion) into its pension fund.
The special dividend is expected to be paid around February 26 2021, conditional on shareholder approval at a meeting around February 11.
Last week, Tesco said it would pay back to the government GBP585 million (RM3.17 billion) of Covid-19 business rates relief, which prompted rivals to do the same.
Murphy said the decision to return the relief was “completely disconnected” to its plans to pay a special dividend.
Shares in Tesco were up 1.3 per cent at 1007 GMT, paring 2020 losses to 10.8 per cent.
While Britain’s three major quoted retailers – Tesco, Sainsbury’s and Morrisons – have performed well during the pandemic, their share prices have not.
“We see strong value in UK supermarkets, manifested in fulsome (free cash flow) yields that if equity markets do not value then acquirers will,” said Shore Capital analyst Clive Black.
— Reuters
