Japan’s Aeon interested in buying Tesco’s Malaysia unit -sources

By: | Published: July 8, 2015 5:20 AM

Japan's Aeon Co Ltd is interested in buying the Malaysian operations of Britain's Tesco PLC, valued at about 900 million pounds

Japan’s Aeon Co Ltd is interested in buying the Malaysian operations of Britain’s Tesco PLC, valued at about 900 million pounds ($1.4 billion), people familiar with the matter told Reuters.

Japan’s largest retailer has been venturing into Southeast Asia where purchasing power is rising in fast-growing economies. In contrast, growth has been hampered at home by deflation, sluggish consumer spending and a shrinking population.

It bought the Malaysian arm of French retailer Carrefour SA in 2012 for 250 million euros ($275.08 million) and last year expanded e-money services in Thailand.

Buying Tesco’s operations would make Aeon Malaysia’s biggest hypermarkets group. The Japanese retailer has 28 hypermarkets in the country and plans to open 100 more stores in various formats by 2020. Aeon also owns 51.7 percent of Aeon Co M Bhd, which has 29 outlets and four MaxValu supermarkets in Malaysia.

Tesco is currently seeking buyers for its $6 billion South Korean business and a stake in data-gathering arm Dunnhumby, to fund a turnaround in its core home market. Britain’s biggest retailer is recovering from an accounting scandal and the loss of market share to discount chains Aldi and Lidl.

Aeon, which started out selling traditional kimono clothing in the late 1700s, is keen to buy Tesco’s Malaysian unit and has informally discussed its interest with corporate advisors, one person familiar with the matter said.

“It’s still in the very early stage,” said one of the people. “It would only come after they are done with South Korea and Dunnhumby.”

The people declined to be identified as they were not authorised to speak with media on the matter.

Tesco, which has not expressed any intention to sell its Malaysian business, declined to comment. A spokesman for Aeon said the company is not in negotiations with Tesco.

A spokesman for Sime Darby Bhd, which owns 30 percent of Tesco’s Malaysian arm, said the Malaysian plantation-to-autos conglomerate will always evaluate opportunities that may enhance shareholder value.

Sime Darby’s latest annual report showed Tesco operates 49 stores throughout Malaysia. Net profit rose 73 percent to 82.2 million ringgit ($21.60 million) last year, on revenue that rose 1.1 percent to 4.65 billion ringgit, the report showed.

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