Competition heats up for Tesco’s Korea unit ahead of Monday deadline
Competition for Tesco's South Korean unit Homeplus valued at about £4bn is heating up ahead of the deadline for final bids on Monday.
Media reports suggest that private equity firms have formed three separate teams to bid for the supermarket's largest operation outside of the UK.
Asia-based Affinity Equity Partners has allied with US private equity firm KKR, while Carlyle Group has joined up with Singapore's GIC. Additionally north Asian-focused MBK partners has sought equity funding from South Korea's National Pension Service to bid for the unit.
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The sale will help finance a turnaround plan after the retailer racked up a £6.38bn loss last year. Chief exec Dave Lewis, who has been in the top spot for nearly a year, is trying to reverse the struggling retailer's fortunes through cost-cutting measures and restructuring.
Credit ratings agency Moody's subsequently said that Tesco must find £5bn to rebuild its balance sheet. It expects the retailer to raise about £4bn from the sale of its South Korean business, and £1bn for the sale of its stake in data business Dunnhumby.
Tesco has already sold off some assets such as its troubled digital entertainment business Blinkbox, as well as its fleet of jets private jets.
Homeplus has more than 400 stores and 500 franchises and serves more than six million customers every week.