Tesco leads FTSE 100 risers as it weighs up Asia sale
Shares in Tesco rose more than five per cent in early trading today, as investors welcomed reports that the company is exploring a sale of its Asian businesses.
The supermarket giant has confirmed that it will launch a strategic review of options for its businesses in Thailand and Malaysia, including a potential sale.
Read more: Tesco mulls sale of Thailand and Malaysia operations
The share price boost put Tesco at the top of the FTSE risers this morning.
The two Asian divisions, which operate under the Tesco Lotus brand, could be worth up to £7bn, according to analyst estimates.
In its interim results published in October, the grocer said its Thailand and Malaysia operations reported combined sales of £2.6bn, while operating profit jumped 54.1 per cent to £171m.
“It is unclear who the unnamed bidder is, but it is presumably a trade operator (rather than a financial buyer) and they must have deep pockets, because these highly profitable Asian operations are worth many billions,” said retail analyst Nick Bubb.
“It is also unclear what Tesco would do with the money, but perhaps we shouldn’t get ahead of ourselves, as Tesco has said the strategic review of Asia is at an early stage.”
Tesco has also announced that it is targeting rapid expansion in Thailand, with goals to build 750 express stores within three years. The company has 2,000 stores in Asia, including joint ventures in India and China, and employs 60,000 people.
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It comes two months after Tesco said chief executive Dave Lewis will step down next year after leading a turnaround of the brand.
Tesco unveiled plans in August to cut 4,500 jobs across its 153 Metro stores in the UK amid a “challenging, evolving retail environment, with increasing cost pressures”.