CP Merchandising Co., Ltd., CP ALL Public Company Limited (SET:CPALL), Charoen Pokphand Holding Company Limited and C.P. Retail Development Company Limited signed a share purchase agreement to acquire unknown majority stake in Tesco Stores (Malaysia) Sdn. Bhd. and Tesco Stores (Thailand) Limited from Tesco PLC (LSE:TSCO) for an enterprise value of $10.6 billion on March 9, 2020. The consideration payable is on cash and debt free basis. The transaction values Tesco Thailand at an enterprise value of $9.9 billion, including $0.4 billion of net cash and Tesco Malaysia at an enterprise value of $0.7 billion, including $0.6 billion of net debt. JPMorgan Chase & Co., UBS AG, Hong Kong Branch and The Siam Commercial Bank committed financing to CP Merchandising Co., Ltd., CP ALL Public Company Limited and Charoen Pokphand Holding Company Limited for the acquisition. Upon the completion of the deal, Tesco Malaysia will cease to be an associate company of Sime Darby.

The transaction representing an EV/EBITDA 11.3x based on the 2020 Financial Year on a post-IFRS 16 basis. For the year ended February 29, 2020, Tesco Stores (Malaysia) Sdn. Bhd. and Tesco Stores (Thailand) Limited reported total assets of £4 billion ($5.3 billion), total common equity of £2.3 billion ($2.9 billion), total revenues of £5.2 billion ($6.8 billion), EBITDA of £753 million ($982.6 million), EBIT of £432 million ($563.7 million) and net income of £326 million ($425.4 million).

The transaction is subject to customary closing conditions, including regulatory approvals in Thailand and Malaysia, approval of the Ministry of Domestic Trade and Consumer Affairs in Malaysia, including the approval of the Trade Competition Commission of Thailand and approval of Tesco's shareholders. The Office of Trade Competition Commission (OTCC) will consider whether to approve, reject or approve the merger with conditions within 90 days of the request. As of October 30, 2020, the OTCC has deferred the decision on the transaction for another 15 days. As of March 9, 2020, the Board of Directors of Charoen Pokphand Foods Public Company Limited, parent of CP Merchandising Co., Ltd. and Charoen Pokphand Holding Company Limited. has approved the acquisition. Tesco PLC shareholders approved the deal. The deal is approved by Thailand's antitrust regulator Office of Trade Competition Commission. Ministry of Domestic Trade and Consumer Affairs in Malaysia approved the deal on November 10, 2020. As of December 9, 2020, there are no further conditions outstanding.

Completion is expected to occur during the second half of calendar year 2020. The transaction is expected to be concluded by the end of 2020. As of March 11, 2020, the disposal of shareholdings in Tesco Malaysia is expected to be fully completed by the third quarter ending November 30, 2020. As of April 22, 2020, the transaction is close during the second half of calendar year 2020. As of December 9, 2020, deal is expected to close by December 18, 2020. Net cash proceeds are expected to be $10.3 billion before tax and other transaction costs. Following Completion, the Board intends to return approximately £5 billion ($6.5 billion) to shareholders by way of special dividend. The Board has also undertaken to make a significant pension contribution of £2.5 billion ($3.26 billion) that is expected to eliminate the current funding deficit and significantly reduce the prospect of having to make further pension deficit contributions in the future, with the remainder of the Net Cash Proceeds being retained to strengthen the balance sheet and for general corporate purposes.

David Wyles and Charles Gournay of Greenhill & Co. International LLP, Anthony Gutman, Milan Hasecic and Nick Harper of Goldman Sachs International and Alisdair Gayne, Omar Faruqui and Nicola Tennent of Barclays PLC (LSE:BARC) acted as financial advisors and Claire Wills, Simon Weller and Keir MacLennan of Freshfields Bruckhaus Deringer LLP acted as legal advisors to Tesco. Wilailuk Okanurak, Pichitpon Eammongkolchai, Sutthipong Koohasaneh and Sonya Kalnin of Linklaters in Bangkok, with support from Matthew Middleditch, Nathalie Hobbs and Marcus Pollard of Linklaters in Hong Kong acted as legal advisors to Charoen Pokphand Foods Public Company Limited. Suparerk Auychai, Dumnern Subpaisarn, Noparat Kaewsringarm, Chris Burkett, Arthit Hemara and Nonnabhat Paiboon of Allen & Overy (Thailand) Co., Ltd. acted as legal advisor to Tesco, Mike Flockhart of Herbert Smith Freehills LLP acted as legal advisor for Barclays Bank plc. Deloitte UK acted as accountant while Equiniti Limited acted as registrar to Tesco PLC. JPMorgan Chase & Co. (NYSE:JPM) acted as financial advisor to CP Merchandising Co., Ltd., CP ALL Public Company Limited and Charoen Pokphand Holding Company Limited.

CP Merchandising Co., Ltd., CP ALL Public Company Limited (SET:CPALL), Charoen Pokphand Holding Company Limited and C.P. Retail Development Company Limited completed the acquisition of unknown majority stake in Tesco Stores (Malaysia) Sdn. Bhd. and Tesco Stores (Thailand) Limited from Tesco PLC (LSE:TSCO) on December 18, 2020. Chia Chee Hoong and Ang Sin E of Rahmat Lim & Partners acted as legal advisor for Charoen Pokphand Holding Company Limited.