Tesco PLC (ADR)(OTCMKTS:TSCDY) was an underperformer during Thursday’s trading session, plummeting by 1% on relatively low volumes. The stock hit a fresh 52-week low during the trading session, which is considered to be a bearish sign. Tesco Plc has been in a strong downtrend forming lower tops and bottoms indicative of strong bearish momentum.The index measuring momentum continues to point towards strong bearish interest at current levels and shows no signs of a reversal, which is a cause for concern. Traders see the stock facing resistance at levels of $7.23in the near term. The stock trades below all moving averages.
With an objective to shift its focus back to business outside Korea, Tesco PLC (ADR)(OTCMKTS:TSCDY) announced to sell off its Korean unit.
As per the report made public by the Reuters, quite a few private equity firms have made different groups to bid the asking amount of $6 billion successfully. If things proceed in the desired manner, this can be the biggest ever private equity deal that Asia has ever witnessed.
Insights of The Matter
As per the reports, these companies have formed three different groups as of now to carry out everything in a hassle-free manner. The first group belongs to Affinity Equity Partners and KKR, whereas the second group belongs to GIC and Carlyle Group. The third and final group belongs to MBK Partners, which look forward to receiving funds from National Pension Service of Korea to participate in this funding.
It’s not the first time when such discussions regarding divesting its Korean Unit – Homeplus, have started floating in the market. Since the time Tesco’s name was involved in an accounting scandal, its Korean business couldn’t do much. The company had witnessed losses at multiple occasions which prompted it to sell this business unit and focus on the other ventures.
The recently reported financial results by Tesco represent that the average annual revenues of Homeplus is around $5.9 billion, which makes it a win-win situation for all the firms that have announced their participation in this deal.
Other Issues Attached To Tesco
Company’s business in U.K. hasn’t been doing that good for last few quarters due to various operational and strategic inefficiencies. However, it assumes that things will return to normal in the near future. Another problem that the firm’s facing at this moment is its unclear approach about future profitability. It hasn’t given any certain profitability level that it’s eyeing, which shows how uncertain Tesco is.
The senior management team will keep all the investors abreast with company’s future plans.