Tesco to sell Korean stores for £4bn
Tesco has agreed to sell its South Korean business Homeplus in a £4.2bn deal in the latest phase of the supermarket group's turnaround plan.
The business, which operates more than 1,000 stores, has been snapped up by a consortium of investors led by Korean private equity firm MBK Partners and including Canadian pension funds and Singapore sovereign wealth fund Temasek.
It follows weeks of speculation about the sale of Homeplus. Tesco is exiting the business after 16 years, with proceeds being used to pay down debt.
Chief executive Dave Lewis has embarked on a shake-up of Britain's biggest supermarket since taking over a year ago.
He has already announced plans to relocate its head office and shut down its final salary pension scheme as well as shutting 43 stores and axing plans to open 49 others.
Mr Lewis has also sold off Tesco Broadband and UK download business blinkbox.
He said: "After a highly competitive process, we are announcing today the proposed sale of Homeplus, our business in the Republic of Korea.
"This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet."
Tesco said the deal was worth £4.24bn on a debt-free basis, or £4bn in cash. After adjustment for "tax and other transaction costs" it will result in net cash proceeds of £3.35bn. It is expected to complete the deal in the final quarter of this year.
Mr Lewis took over at Tesco following sliding sales under predecessor Philip Clarke.
The group has also been embroiled in scandal over an accounting black hole as large as £326m. The Serious Fraud Office is investigating.