Tesco (TSCO) has announced that - following weekend press reports - it has 'commenced a review of the strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses'. Now - naturally - nothing is guaranteed but to put the potential deal size into context, it is possible that (as one newspaper observes) 'the sale of the remaining Asian business could surpass the market values of J Sainsbury (SBRY) and Wm Morrison (MRW), both about £4.9 billion'...
I think what has happened is that somebody has put in an opportunistic indication of interest and the Tesco board is duty bound to consider it. And let us not forget that Tesco is in a bit of mild flux at the moment. As I detailed here, the company's celebrated turnaround CEO 'Tesco Dave' is set to step down next year and although I still think that 'this is a calm and unrushed decision taken from a position of strength and a solid/deep ongoing Tesco executive bench', such a change is always an opportunity for potential bidders.
Anyhow at a £5 billion+ receipt tag, Tesco could do a lot including knocking down either core or pension debt, returning cash to shareholders and/or reinvesting it back into the business. Naturally, it also has the scope to continue investing in the business and to continue to benefit from the structural positives around emerging market growth. It is nice to have such options...after all every little helps.
I am still liking the shares despite the near 5% rise for all the reasons discussed at my link. And for the technicians out there, will the stock break out from the 250p resistance level? Next stop...the Christmas trading update.
Filed under: Tesco, Lord Alli, Koovs, Justin the Clown, Watches of Switzerland, Julie Meyer, Patrick Abbott
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