Tesco PLC (ADR)(OTCMKTS:TSCDY) was a notable decliner during Wednesday’s trading session declining by 1.85% on heavy volumes, which were 3.8 times the 30 day average turnover. Bears continue to hold the upper hand as the stock continues to form lower tops and lower bottoms. Tesco currently trades below all important moving averages, which is considered to be bearish. The MACD oscillator continues to show no signs of a bullish reversal, which is a negative. The RSI indicator continues to form lower highs indicative of the strong bearish momentum. The stock hit a fresh 52 week low during yesterday’s trading session.
Tesco PLC (ADR)(OTCMKTS:TSCDY) is looking to sell its Korean unit to shift its focus back to other businesses and get rid of financial distress it’s facing in the domestic market. A recently published report by Reuters claims that a few private equity firms have formed three separate packs to ensure that they can afford a bid of up to $6 billion to acquire Tesco’s Korean Business unit.
If everything falls in line, this could be the biggest ever private equity deal that Asian subcontinent has ever witnessed.
Insights of The Matter
If one pays a little extra heed to this matter, he can find that Affinity Equity Partners and KKR are in the first group, whereas GIC and Carlyle Group are in another. The third and final group belongs to MBK Partners that look forward to getting funding from the National Pension Service of South Korea to proceed further in this bidding procedure.
What Led Cisco To Sell Korean Unit
There are different theories floating in the market related to this matter, but experts believe that a recent accounting scandal that not only affected Cisco’s financial abundance but also harmed its social image prompted the company to take this step. If Cisco’s South Korean business, Homeplus, is divested successfully, it will be marked as the biggest move that the company has ever made to reverse the adverse effects caused by the scandal.
In terms of financial position, Homeplus isn’t in worst of the conditions. According to reports, its average annual revenues are around $5.9 billion. This decision may help the company come out of financial distress, but getting back the trustworthy place it once had in the market will take some time.
The senior management of the company looks forward to taking many more such steps to strengthen market image in the coming months. Detailed information of all these decision will be announced from time to time.