Possible sale of Tesco Lotus Thailand
Tesco is looking for a way to raise funds following the crisis over its accounting practices that led to a £263 million (13.8 billion baht) profit overstatement at the world's third biggest retailer. The company is considering several options to pull itself out of the biggest crisis in its history, including a sale of all assets globally, a sale of its business in Asia and raising capital through partnership deals. Tesco appears not to have decided which option it would take and is likely to finalise the decision by February at the soonest. Ek-Chai Distribution System Co, the operator of Tesco Lotus in Thailand, has dismissed reports of any future sale of Tesco UK's Thai assets.
However, three major Thai retailers - Charoen Pokphand Group (CP Group), Central Group and Thai Beverage (ThaiBev) have expressed interest in buying Tesco's assets in Asia. Of the three candidates, Central seemed to the strongest in terms of capital given its low level of debt and high capacity to borrow capital for new investment. CP Group is said to be highly leveraged while ThaiBev had borrowed a huge amount of capital recently for expansion including the purchase of the Singapore company Fraser and Neave. Apart from Thai business groups, Hong Kong-based Dairy Farm, Japan's Aeon, Jardine Group and US retailer Walmart are all interested in acquiring Tesco's business with Walmart being the financially strongest candidate.
Tesco's Asian assets include Tesco Lotus in Thailand, and operations in South Korea and Malaysia. The Asian operations are Tesco's most profitable and this could be a major factor in the company's final decision. Tesco's assets in Thailand are estimated to be more than 200 billion baht, while the South Korean subsidiary's assets are slightly lower than Thailand's with the Malaysian operation being the smallest in Asia.
Possible sale of Tesco Lotus Thailand
Tesco is looking for a way to raise funds following the crisis over its accounting practices that led to a £263 million (13.8 billion baht) profit overstatement at the world's third biggest retailer. The company is considering several options to pull itself out of the biggest crisis in its history, including a sale of all assets globally, a sale of its business in Asia and raising capital through partnership deals. Tesco appears not to have decided which option it would take and is likely to finalise the decision by February at the soonest. Ek-Chai Distribution System Co, the operator of Tesco Lotus in Thailand, has dismissed reports of any future sale of Tesco UK's Thai assets.
However, three major Thai retailers - Charoen Pokphand Group (CP Group), Central Group and Thai Beverage (ThaiBev) have expressed interest in buying Tesco's assets in Asia. Of the three candidates, Central seemed to the strongest in terms of capital given its low level of debt and high capacity to borrow capital for new investment. CP Group is said to be highly leveraged while ThaiBev had borrowed a huge amount of capital recently for expansion including the purchase of the Singapore company Fraser and Neave. Apart from Thai business groups, Hong Kong-based Dairy Farm, Japan's Aeon, Jardine Group and US retailer Walmart are all interested in acquiring Tesco's business with Walmart being the financially strongest candidate.
Tesco's Asian assets include Tesco Lotus in Thailand, and operations in South Korea and Malaysia. The Asian operations are Tesco's most profitable and this could be a major factor in the company's final decision. Tesco's assets in Thailand are estimated to be more than 200 billion baht, while the South Korean subsidiary's assets are slightly lower than Thailand's with the Malaysian operation being the smallest in Asia.
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