September 30, 2015 / 6:14 PM / 4 years ago

Tesco says no more big overseas disposals being discussed

LONDON (Reuters) - Tesco has not discussed any further material overseas sales, Chairman John Allan told a meeting on Wednesday where shareholders approved the UK supermarket group’s $6.1 billion (£4.03 billion) sale of its South Korean arm.

A man pushes a pram past a Tesco supermarket near Altrincham, northern England, April 22, 2015. REUTERS/Phil Noble

Following the South Korea disposal, Tesco’s largest overseas asset, Britain’s biggest retailer retains businesses in Thailand and Malaysia, central Europe and Ireland.

Earlier this year possible suitors expressed interest in both Tesco’s Thai and Malaysian businesses.

“As we sit here today we believe that we have the right sort of assembly of geographies that we are in,” said Allan, in response to a question at the shareholder meeting in central London.

“At the moment our intention is to hold what we have and to develop it and make the very best of it.”

Allan did, however, add the caveat: “I can envisage circumstances under which that might change.”

Tesco investors approved the British supermarket’s deal to offload the South Korean business Homeplus to a group led by private equity firm MBK Partners.

The sale of Homeplus represents the first large divestment by Tesco Chief Executive Dave Lewis, who wants to slash debt and rid the firm of its junk credit rating after its profits were battered by market share losses to discounters Aldi and Lidl in Britain and by an accounting scandal.

It follows Tesco’s costly exits from Japan and the United States, as well as a reduction of its exposure to China, under previous management.

The Homeplus disposal will reduce Tesco’s total indebtedness, which stood at 21.7 billion pounds as of end-February 2015, by 4.225 billion pounds.

The deal has allayed fears that Tesco will need to ask shareholders for cash to secure its balance sheet through a rights issue.

Allan refused to rule out any fundraising but added: “actually we want to get our balance sheet in shape as much through our own efforts as we can, without calling on shareholders to put more of their money into the company.”

Lewis put Tesco’s customer data business Dunnhumby on the block in January but has failed to find a buyer.

“We have looked at the options around Dunnhumby...We’ve not concluded that. As soon as we conclude it we would announce what it is we intend to do,” Lewis told shareholders.

Shares in Tesco closed 6.9 percent higher on Wednesday at 183.2 pence after rival Sainsbury’s lifted its profit forecast, boosting sentiment across the UK grocery sector.

Editing by Elaine Hardcastle

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