Following completion of the disposal, the Tesco board intends to return about £5 billion to shareholders via a special dividend with associated share consolidation.
Tesco said the deal will ‘further de-risk’ its business by reducing indebtedness through a £2.5 billion pension contribution that, along with other measures, is expected to eliminate the current funding deficit and significantly reduce the prospect of having to make further pension deficit contributions in the future.
Completion of the disposal, which is conditional on Tesco shareholder approval and customary regulatory approvals in Thailand and Malaysia, is expected during the second half of 2020.
Tesco chief executive Dave Lewis said: “Following inbound interest and a detailed strategic review of all options, we are announcing today [Monday March 9] the proposed sale of Tesco Thailand and Tesco Malaysia. This sale releases material value and allows us to further simplify and focus the business, as well as to return significant value to shareholders.
“I would like to thank all of our Tesco Thailand and Tesco Malaysia colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong business. I am confident that the agreement we have reached with CP Group presents an exciting opportunity for their continued success.”