You can‘t buy this in store – Tesco has received three separate binding bids for its South Korean unit, ‘Homeplus‘.
According to those close to the deal, the bids came from a consortium of Affinity Equity Partners and KKR & Co, Carlyle Group LP, and MBK Partners. Each bid has come in at around 7m won ($5.9bn).
Tesco had set Monday as the deadline for bids. The company and its advising bank HSBC are expected to choose a preferred bidder early this week, or early September at the latest. Time is of the essence: the South Korean won depreciates against the British pound. With the recent economic tremors in China, the market in South Korea and Tesco‘s potential buyers are almost certain to be affected.
“This is a mission-critical deal for Tesco…” another person close to the deal added. “The impetus is on them to get the deal done very quickly, with extremely high certainty.”
Tesco, like the other members of the ‘Big Four‘ of British retail, is currently battling to retain and regain its market share in the face of its competitors. Their biggest challengers are discount stores such as Aldi and Lidl. The company also continues to suffer the fallout from last year‘s accounting scandal, which revealed that it had greatly overstated its first half profits.
The well-known British retailer no doubt intends for the South Korean sale to be a turning point for their finances. As it currently stands, the deal may even bring the company back into investment grade territory years before current estimates.
Phil Gallagher
