Tesco sold Homeplus, South Korean business stores for £4bn

The proceeds will be used to pay down debt and help revitalise its UK business.

Homeplus is being bought by MBK Partners, a South Korean buyout firm set up a decade ago.

It has partnered with a Canadian pension fund and Singapore's Temasek Holdings for the deal.

Dave Lewis, chief executive of Tesco, said: "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."

After tax and other costs the sale will produce £3.35bn in cash for Tesco and is expected to be completed before the end of the year.

Retail analyst Nick Bubb said the main aim was to reduce its debt mountain and avoid a rights issue. "Interestingly, however, Tesco say that the disposal will also give it the financial flexibility to buy some UK store freeholds," he added.

Bruno Monteyne, an analyst at Bernstein and a former senior Tesco supply chain executive, said the deal would allow the company to qualify for a top credit rating once more from the ratings firm Moody's in 2017-18. 

The Homeplus deal is the first major disposal since Tesco reported a record pre-tax loss of £6.4bn for the year to February.

That compared with annual pre-tax profit of £2.26bn a year earlier.

It was the biggest loss reported by a UK retailer and one of the largest in the country's corporate history.