Tesco sells assets, whilst Alibaba expands

Date : 12 April 2016

Tesco has announced a deal to sell part of its stake in South East Asian online marketplace Lazada, whilst the deal will further boost the reach of Chinese e-commerce giant Alibaba.

Tesco will retain a small stake in Lazada

Tesco invested in Lazada in November 2013 and held a 19.6% stake in the online marketplace. However, it has entered into an agreement to sell an 8.6% equity stake to online e-commerce giant Alibaba for US$129m. Following the deal, Tesco will be left with a remaining diluted stake of 8.3% taking into account renewed investment from other parties. Tesco will use the funds raised from the transaction for working capital purposes.

Alibaba takes another step towards a pan-Asian platform

The deal will see Alibaba become Lazada's controlling shareholder, with the transaction including an investment by the Chinese retailer of US$500m into the business. The transaction also states that Alibaba has the right to purchase, and the shareholders the right to sell, their remaining stakes in Lazada at a fair market value within 12 to 18 months. Alibaba's controlling stake in Lazada will see the retailer significantly grow its geographic coverage further across South East Asia, moving closer towards its founder, Jack Ma's ambition for a truly global e-commerce platform.

Tesco also considering other disposals...

The news of the sale of part of its stake in Lazada, comes alongside fresh speculation that Tesco is considering further disposals. We predicted in 2016 that Tesco would continue to explore opportunities to offload non-core assets and according to press reports, the retailer is now looking to sell off the loss-making Dobbies garden centre chain, which it acquired in 2007.