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Dealwatch: Freshfields and Cleary Gottlieb advise on Tesco’s £4bn South Korean sale

Freshfields Bruckhaus Deringer and Cleary Gottlieb Steen & Hamilton have won roles advising as Tesco agrees to sell its South Korean unit Homeplus for £4.2bn, in an effort to raise funds to revitalise the business.

In its first major disposal since the supermarket giant suffered financial challenges, Tesco’s sale of its biggest overseas unit to a group of investors led by MBK Partners will produce £3.35bn in cash after tax and other costs, and is expected to complete before the end of the year.

Tesco turned to its usual Magic Circle adviser Freshfields with Asia corporate partner Simon Weller leading a team out of Hong Kong alongside Tesco relationship partner Claire Wills and corporate partner Alison Smith advising out of London. Korean firm Bae, Kim & Lee also advised Tesco on local issues.  

Cleary acted for MBK , led by Seoul corporate partner Sang Jin Han, while local Korean firm Yulchon also advised on domestic law.

Dave Lewis, chief executive of Tesco, said: ‘After a highly competitive process, we are announcing today the proposed sale of Homeplus, our business in the Republic of Korea. This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet.’

Seoul-based MBK Partners led a consortium, including Canada Pension Plan Investment Board and Temasek Holdings, in the sale process and is understood to have out-bid interest from investment firms Affinity Equity Partners, KKR and The Carlyle Group.