Britain’s biggest retailer Tesco (TSCO.L), on Tuesday completed its exit from China with the 275 million pound (or $357 million) sale of its joint venture stake to state-run partner China Resources Holdings (CRH).
Tesco, having struggled to crack the Chinese market, established the Gain Land venture with CRH in 2014, combining the British group’s 131 stores in China with its partner’s almost 3,000.
It said that the disposal of its 20 per cent stake allowed it to further simplify and focus the business on core operations, adding that the proceeds would be used for general corporate purposes.
The deal is scheduled to complete on Feb. 28.
However, shares in Tesco were up 0.7 per cent at 0816 GMT, extending its gains in 2019 to 12.4 per cent.
According to Bernstein analyst, Bruno Monteyne, this extra 275 million pounds of forgotten value should be accretive to most street valuations.
Tesco, after costly exits from Japan and the U.S. and the sale of its South Korean business, signalled in December a further retreat from its once lofty global ambitions by starting a review of its operations in Thailand/Malaysia.
However, a sale of its operations in Thailand and Malaysia would mean Tesco’s only remaining overseas operations, apart from Ireland, would be its central European division, comprising stores in the Czech Republic, Hungary, Poland and Slovakia.
According to CEO Dave Lewis, the Asian exit could be one of the last acts of Tesco who will be succeeded by Ken Murphy in October.
Bernstein expects Tesco to start a one billion pound share buyback programme in its 2020-21 financial year.
Edited By: Yahaya Isah/Wale Ojetimi