MBK Said to Team Up With Goldman in $6 Billion Tesco Korea Bid

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MBK Partners Ltd. plans to team with a Goldman Sachs Group Inc. private-equity fund to jointly bid for Tesco Plc’s South Korean business, which could fetch about $6 billion, people familiar with the matter said.

MBK, North Asia’s biggest independent buyout firm, and Goldman Sachs Principal Investment Area are preparing a binding offer for the Homeplus unit by the Aug. 17 deadline, according to the people. Affinity Equity Partners Ltd., Carlyle Group LP and KKR & Co. have also been invited to bid, the people said, asking not to be named as the process is confidential.

Tesco, the U.K.’s biggest supermarket chain, may finalize an agreement with a winning group in early September, one of the people said. Private-equity bidders are teaming up for the Homeplus purchase, as the acquisition would likely be too large for any one fund, people familiar with the matter said in June.

Hana Daetoo Securities Co., NH Investment & Securities Co., Shinhan Bank and Woori Bank are in talks to provide financing for the MBK consortium’s bid, two people said. Representatives for MBK, Goldman Sachs, Tesco, Hana Daetoo, NH Investment and Woori Bank declined to comment, while a spokesman for Shinhan Bank said he couldn’t immediately comment.

Biggest Loss

Tesco, which in April reported the biggest annual loss in its 96-year history, has been weighing divestitures as it seeks to plug a debt hole of about 21.7 billion pounds ($33.8 billion). Chief Executive Officer Dave Lewis is seeking to revive the company’s market-leading grocery business in the U.K., where sales are falling amid a price war fueled by the expansion of German discounters Aldi and Lidl.

The U.K. grocer entered the Korean market in 1999 under former Chief Executive Officer Terry Leahy, with a 130 million-pound investment into a joint venture with a Samsung Group affiliate. Tesco initially held an 81 percent stake, before buying Samsung out of the venture in stages.

Homeplus, which has 935 stores in South Korea, is the country’s third-largest discount store chain with a 25 percent market share, following E-Mart Co. and Lotte Mart, according to a March regulatory filing from E-Mart.

South Korea’s discount store market has grown almost 50 percent to 46.6 trillion won ($39.8 billion) last year from 2009, Lotte Shopping Co. said in its annual report.

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