Tesco Could Be Leaving Asia

Shares of Tesco jumped 4.7% higher Monday after news emerged that unsolicited interest in its Asian assets was being considered by the retailer. It wasn’t revealed what entity might have expressed interest, nor what the price might be. Analysts value the Asian assets at roughly $9 billion.

The assets under consideration are those in Thailand and Malaysia. The number of stores in Malaysia is tiny, but in Thailand Tesco has some 1,967 stores currently. Asian sales account for roughly 8% of the company’s revenues and 10% of its profits.

As recently as this past June Tesco said its Thailand operations were one of its key growth areas. Tesco has a commanding presence in Thailand, and also said it could see the opportunity for 750 additional convenience stores being opened there in the medium term.

Given the fact that Thailand is a key growth area for Tesco, and given its profitability and commanding presence, any offer for those stores would need to be exceptional.

Tesco has just celebrated its 100-year anniversary, and is five years into a turnaround plan that was recently said to be successful by CEO Dave Lewis. Following that announcement Lewis said he was stepping down as CEO. He will be replaced by Ken Murphy, who was previously an executive at Walgreen’s Boots Alliance.

Where Tesco once had global aspirations, over the past several years it has made costly exits from the U.S., China, and Japan. It has also sold off its South Korean assets, as well as those in Turkey.

Shares have gained 25.4% over the past 52 weeks.