Tesco could net a windfall of up to £7.2bn by selling its Asia business, according to a City analyst and former supermarket executive.
The prospect of such a lucrative deal cheered the markets, with shares in the retail giant leaping by almost 5%.
The price prediction came after Tesco said it was considering offloading more than 2,000 of its stores in Thailand and Malaysia following “inbound interest” from a potential buyer.
Former Tesco executive Bruno Monteyne, a senior analyst at the investment management firm Bernstein, said: “A valuation of £6.5bn to £7.2bn seems a fair valuation for an unsolicited proposal.”
In a statement, the company said: “Tesco confirms that, following inbound interest, it has commenced a review of the strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses.
“The evaluation of strategic options is at an early stage, no decisions concerning the future of Tesco Thailand or Malaysia have been taken, and there can be no assurance that any transaction will be concluded.”
The potential buyer has not been identified, but Clive Black, retail analyst at Shore Capital, said: “One can see how a number of major trade, family office and private equity investors in Asia could be interested in this trophy asset within the Tesco Group, albeit quite what local regulators think needs to be considered.”
Tesco has 1,967 stores in Thailand, trading under the Tesco Lotus brand, and 74 in Malaysia, which collectively employ 60,000 staff.
Operating profits in the division reached £286m last year, although a tough sales environment led to a shake-up of the business, with a move towards smaller convenience stores.
In June, Tesco had said it was well placed to grow in Asia, particularly in Thailand, highlighting an opportunity for 750 new stores over the “medium term”.
If a deal is reached on the businesses, it would signal almost a complete rollback of the supermarket’s expansion overseas – having already shed its interests in South Korea, Turkey, Japan, the US and China.
Tesco’s only other foreign operations, apart from Ireland, is its loss-making central European division, with stores in the Czech Republic, Hungary, Poland and Slovakia.
The focus of investment has been the UK under chief executive Dave Lewis, underlined by the £3.7bn takeover of the food wholesaler Booker last year.
Over the last five years, he has overseen a turnaround in the fortunes of the company, rocked by record losses, an accounting scandal, overambitious expansion and competition from budget rivals.
Mr Lewis, described by one leading analyst as “the bloke that saved Tesco”, announced in October that he would step down next summer, declaring that the “turnaround is complete”.
He will be succeeded by Ken Murphy, a former executive at healthcare group Walgreens Boots Alliance – the owner of high street retailer Boots.