Shoppers at a Homeplus outlet in Seoul. MBK Partners and Goldman Sachs Group’s private-equity fund are preparing an offer for the UK’s biggest supermarket chain Tesco’s South Korean unit.
Bloomberg/Seoul
MBK Partners plans to team with a Goldman Sachs Group private-equity fund to jointly bid for Tesco’s South Korean business, which could fetch about $6bn, people familiar with the matter said.
MBK, North Asia’s biggest independent buyout firm, and Goldman Sachs Principal Investment Area are preparing a binding offer for the Homeplus unit by the August 17 deadline, according to the people. Affinity Equity Partners, Carlyle Group and KKR & Co have also been invited to bid, the people said, asking not to be named as the process is confidential.
Tesco, the UK’s biggest supermarket chain, may finalise an agreement with a winning group in early September, one of the people said. Private-equity bidders are teaming up for the Homeplus purchase, as the acquisition would likely be too large for any one fund, people familiar with the matter said in June.
Hana Daetoo Securities, NH Investment & Securities, Shinhan Bank and Woori Bank are in talks to provide financing for the MBK consortium’s bid, two people said. Representatives for MBK, Goldman Sachs, Tesco, Hana Daetoo, NH Investment and Woori Bank declined to comment, while a spokesman for Shinhan Bank said he couldn’t immediately comment.
Tesco, which in April reported the biggest annual loss in its 96-year history, has been weighing divestitures as it seeks to plug a debt hole of about £21.7bn ($33.8bn). Chief executive officer Dave Lewis is seeking to revive the company’s market-leading grocery business in the UK, where sales are falling amid a price war fuelled by the expansion of German discounters Aldi and Lidl.
The UK grocer entered the Korean market in 1999 under former chief executive officer Terry Leahy, with a £130mn investment into a joint venture with a Samsung Group affiliate. Tesco initially held an 81% stake, before buying Samsung out of the venture in stages.
Homeplus, which has 935 stores in South Korea, is the country’s third-largest discount store chain with a 25% market share, following E-Mart Co and Lotte Mart, according to a March regulatory filing from E-Mart.
South Korea’s discount store market has grown almost 50% to 46.6tn won ($39.8bn) last year from 2009, Lotte Shopping Co said in its annual report.
