Britain's Tesco has agreed to sell its South Korean business to a group led by private equity firm MBK Partners for $6.1 billion. As Sara Hemrajani reports, it's the retail giant's first major disposal since it hit financial difficulties and decided to focus on its troubled domestic business.
Tesco's global reach has just become a bit smaller. The British retail giant is selling its South Korean unit, Homeplus, for more than $6 billion. It's being snapped up by a group of investors led by private equity firm MBK Partners. This is the first major asset disposal since Dave Lewis took charge as CEO last summer. Many analysts say the foreign retreat is a welcome sign. Darren Sinden is from Admiral Markets. SOUNDBITE: Darren Sinden, market commentator, Admiral Markets, saying: "It's something of an elephant's graveyard really, overseas expansion for UK retailers, particularly in the grocery business. No one really has done particularly well in the past couple of decades when they've expanded, be it into the U.S. or into the Far East." Tesco says it'll use the cash from Homeplus's sale to strengthen its balance sheet. The company has seen its share price tumble in the past year in the wake of profit warnings, an accounting scandal and mounting debts. Still there's some optimism that the new turnaround plan could bear fruit, especially at home in the UK. SOUNDBITE: Darren Sinden, market commentator, Admiral Markets, saying: "What Tesco does have of course is a fantastic brand, a fantastic position, still obviously the number one grocer in the UK and it has all of that infrastructure already in place, or a lot of the infrastructure already in place, which should allow it to compete very favourably even with the discounters, who perhaps are seen by many as being smaller and more nimble." Reversing expensive overseas expansion is one of the numerous steps Tesco is taking to rescue itself from the biggest crisis in its 96-year history.