Reports say Homeplus on the market

Home > Business > Industry

print dictionary print

Reports say Homeplus on the market

Tesco, the United Kingdom’s biggest supermarket chain, may sell Korean discount chain Homeplus in a deal that could fetch 7 trillion won ($6.3 billion), according to multiple media outlets, citing investment bank sources.

Tesco is said to be working with advisers, including HSBC Holdings and Freshfields, an international law firm.

“Interested bidders will receive teaser letters in three to five days,” an investment bank source said.

Potential bidders include U.S.-based Carlyle Investment Management and private equity firms Kohlberg Kravis Roberts and Affinity Equity Partners.

Also cited as a possible buyer is Nonghyup, a local agricultural cooperative with financial operations.

Multiple industry sources with knowledge of the matter said preliminary bidding could start next month and end in October.

“[Tesco] will likely try to sell off the unit as a whole at first,” said an anonymous source in the retail industry. “But the size of deal is so big the bidding likely would not go as smoothly as they want. Then they would consider spinning off.”

Homeplus consists of two divisions - Homeplus and Homever. Homeplus operates 117 stores, while Homever runs 33 supermarkets.

The U.K. chain has suffered significant losses for years because of sharply declining sales at home and abroad. It posted a record loss in the first quarter this year.

It recently closed Homeplus discount stores on its home turf.

Earlier this year, the U.K. retailer notified 2,000 members of its headquarters office staff that they would lose their jobs to cost-cutting restructuring.

The announcement came as Tesco planned to reduce head office costs by 30 percent.

Homeplus, the second-largest supermarket chain in Korea, also faces stiff competition with local rivals.

Former and current executives of Homeplus were slapped with travel bans and investigated last year over allegations that personal information collected during in-store prize giveaways was sold to insurance companies.

The revelation dealt a further blow to the chain that is already beset by strained relations with its union, slumping sales and a separate scandal surrounding a giveaway event.

In January, Tesco denied reports that it would sell Homeplus.

Homeplus declined to comment.


BY LEE HYUN-TAEK, PARK EUN-JEE [park.eunjee@joongang.co.kr]
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
s
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)