Sime Darby expects RM270m net gain from Tesco Malaysia stake sale

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KUALA LUMPUR (April 22): Sime Darby Bhd is selling its 30% stake in Tesco Stores (M) Sdn Bhd for RM300 million.

In a statement today, Sime Darby said its wholly-owned subsidiaries, Sime Darby Allied Products Bhd and Sime Darby Holdings Bhd, have entered into conditional agreements with Tesco Holdings BV and Tesco Plc, as well as the buyer of the stake, CP Retail Development Company Ltd.

The disposal is part of a larger deal between Tesco Plc and Thailand’s CP Group signed in March to sell Tesco’s businesses in Thailand and Malaysia to CP for an enterprise value of US$10.6 billion.

Sime Darby, which has held the stake in Tesco Malaysia since November 2001, said the deal is part of its ongoing efforts to rationalise its non-core assets.

The deal is estimated to provide Sime Darby with a net disposal gain of RM270 million.

“We have come a long way with our joint-venture with Tesco. We opened our first store in Puchong in 2002. We have grown the business over the years and now have 69 stores nationwide.

“This deal provides Sime Darby with an opportunity to exit the non-core hypermarket business at a reasonable valuation. This transaction is part of our ongoing efforts to rationalise our non-core assets,” said Sime Darby group chief executive officer Datuk Jeffri Salim Davidson.

The transaction is conditional upon the approval of the Malaysian Ministry of Domestic Trade and Consumer Affairs, the sale of Tesco BV’s shares in Tesco Malaysia and the sale of Tesco’s Thai business to CP, the statement added.

The proposed disposal is expected to be completed in the second half of this year.

Sime Darby shares rose 3 sen or 1.64% to close at RM1.86 today, giving it a market capitalisation of RM12.65 billion.