Could Tesco live to regret selling up in Asia?

The history of Tesco reads eerily like the history of Britain. Starting off small, it grew into a superpower that strode on to the world stage for a while, only to beat a mostly ignominious retreat.

The supermarket that ate Britain now appears to be in the final stages of that. Having pulled out of a diverse range of markets including California, South Korea, Japan and Turkey, the future of its businesses in Malaysia and Thailand is being reviewed following “inbound interest” from an unnamed investor.

The second of the pair has on occasion been described as a “jewel” in Tesco’s crown. With margins of 6 per cent, twice what the grocer makes from its UK customers, that description is apt.

The surprise announcement was, naturally, accompanied by the usual caveats. Early stages, no decisions made, we may not do anything at all so don’t get overexcited.

They were, of course, completely ignored by the market. Investors got more excited than a ten-year-old confronted with an XBox-shaped parcel on Christmas day. Tesco shares shot to the top of the FTSE 100 leaderboard as if the deal was already done and the announcement represented a golden leaving gift from outgoing CEO David Lewis.

The faith of those who piled into the shares on the back of a succession of analysts’ buy notes could well prove justified. Even if the unnamed “inbound” investor doesn’t ultimately pony up, the announcement puts the businesses in play so someone probably will. Jewels in crowns with margins as juicy as a Tesco finest Turkey don’t often come on to the market. When they do, it pays to strike.

That leaves the question of what will happen to the proceeds, with some analysts suggesting Tesco could reel in as much as £7bn.

With no obvious use for such a bung, the capital would appear destined for its shareholders pockets, either via a buyback or a special dividend or both. Hence their excitement.

Whether they’ll be as enthusiastic about Tesco’s long-term prospects remains to be seen. The company’s attempt to become a global retailer was already in the rear in the rearview mirror before this.

But the sacrifice of the most successful part of its globetrotting mission leaves a UK-focused outfit with a semi-detached membership of Europe, where Tesco still has operations dotted around. It would probably quite like to secure an exit from them, but that could prove harder to achieve than it looks. Sound familiar?

The difference is that getting out of Europe would make sense for Tesco in a way that it doesn’t for Britain. Its businesses there are less than stellar and the division makes a loss. Unfortunately, there don’t appear to be any bidders on the horizon.

Before the arrival of Lewis, Tesco’s international businesses, and in particular the Asian pair, up for review, served to help keep things ticking over while the core was rotting.

Things look very different now. Lewis has beefed up the UK offer both organically, in terms of a revived consumer offer, and through corporate activity, such as the successful merger with wholesaler Booker.

He is leaving his successor a business that is firing on most of its cylinders. It might now be a big fish in a small pond, but it is at least a healthy one.

If it is to remain that way, however, it will need Britain to remain a healthy place. With Boris Johnson and his thuggish Conservatives looking set for a majority in parliament, there’s no guarantee of that. Is it possible the company might just come to regret a decision to sell up elsewhere?