Tesco Picks an Asian Private-Equity Firm Bidder as the Buyer of Its South Korean Unit

Tesco is finalizing the deal to sell its South Korean unit to MBK Partners Ltd, an Asian private-equity firm. The Wall Street Journal reported on Wednesday that the deal ranges from $6-7 billion, which could be South Korea's biggest private equity deal if it pushes through.

The British multinational retailer picks the MBK Partners Ltd. over several other bidders, including Affinity Equity Partners, KKR and Carlyle Group. Initially, MBK has teamed up with a private equity arm of Goldman Sachs Group. Inc. However, the Wall Street firm has ceased to participate in the process.

Selling its South Korean unit, 'Homeplus', will help Tesco recover from the accounting scandal that has affected its retail revenue. In June, Tesco has hired HSBC bankers to process the sale.

"Tesco has more than 400 stores in South Korea under the Homeplus brand, as well as substantial operations in Thailand and Malaysia," according to an article by The Telegraph on June 4.

If the deal with North Asia's biggest buyout firm is sealed, Tesco will be able to pay its debt of $33.2 billion. The Wall Street Journal also states that the multinational retailer is in the process of closing the sales of Dunnhumby, its data-analysis unit.

Bloomberg's article last Tuesday reported that Tesco's South Korean business is considered its Asia's "crown jewel", valued at 4 billion pounds, surpassing Dunnhumby valuation at 1.6 billion pounds, as estimated by the Credit Suisse Group AG two months ago.

Tesco has recorded a total of $9.56 billion loss in April, which has been its steepest annual loss this year. It has ended its 32-year ties with PricewaterhouseCoopers (PwC), assigning Deloitte as the company's new auditor.