Tesco sells half stake in Asian ecommerce site to Alibaba

12th Apr 2016 07:12

(ShareCast News) - Tesco has agreed to sell just over half its stake in South East Asia ecommerce marketplace Lazada to China's giant Alibaba Group for $129m.Ahead of Wednesday's results from the supermarket group, which made a £124m ($200m) investment in 2013, will sell an 8.6% stake to Alibaba $129m, which it said it will use for general working capital purposes.The sale leaves Tesco with an 8.3% holding and values Lazada at roughly $1.5bn.Alibaba will, through a separate further investment, become Lazada's controlling shareholder after the transaction.Chinese entrepreneur Jack Ma's company has entered into a put-call arrangement with the company's shareholders that will give his company the right to purchase, and the shareholders the right to sell collectively, their remaining stakes at a fair market value within the 12 to 18 month period post closing of the transaction.Tesco's share sell-down follows recent press reports that it may sell some of its investments in its core market too, despite directors drawing a line under further major asset sales after the sale of the Korean business.Preliminary results on Wednesday from the grocer are expected to show revenue of £55.3bn and underlying operating profit of £932m.Analysts at Shore Capital said they expected a "pleasing update" from the core chain, with positive fourth quarter like-for-like sales.Goldman Sachs last week restated its 'sell' rating on the grocer with the stock up 28% in 2016 so far, growth from discounters having picked up this year and £4.5bn of debt coming due by 2020.Ahead of the results more simplification and fine tuning is evident with the announcement thatTesco has entered into an agreement to sell an 8.6% stake in Lazada Group, the eCommerce gateway in South-East Asia to Alibaba Group for $129m. Separately, through a further investment, Alibaba will become Lazada's largest investor. Tesco now will have an 8.3% fully diluted stake, noting that it invested $200m in Lazada originally. The funds will be used for general working capital.