By Park Si-soo
Tesco is coming under pressure to settle legal disputes caused by customer data sales by its Korean unit, Home plus, to insurance firms.
This comes as the ailing British retailer seeks to sell Home plus to improve its financial health.
Consumer groups have called for Tesco to come up with measures to duly compensate the affected Home plus customers, estimated to be 7.12 million. Home plus CEO Do Sung-hwan and several executives were indicted in February for reaping illicit gains by selling customers' data to insurance firms.
"We were taken aback after learning that Tesco is moving to sell Home plus with litigation still unsettled," the Korea National Council of Consumer Organizations said in a statement. "The primary thing to do is settling the case and the sale should come second."
To that end, the council pledged to take "all necessary" measures.
A question that remains unanswered is whether Home plus will be able to address the issue on its own ― and smoothly. To settle the case will cost Home plus a lot of money, thus it can't be done without Tesco's cooperation.
Yet, by some accounts, Tesco seems to have lost confidence in the Home plus chief, meaning a smooth settlement could be a pipedream. This raises concerns that Home plus could be plagued with labor and other disputes in the process of any sale.
Industry insiders said Do has fallen out of favor with Tesco's management in the wake of the customer data scandal and a labor-management dispute last year. They said Tesco's hiring of HSBC Holdings as lead manager for the sale was leaked to the media last week with Do not even being alerted to the decision by Tesco.
In fact, Do ruled out the possibility of Home plus's sale during a press conference in March, saying, "I have not been told about the sale of Home plus since I became CEO two years ago. What I can tell for sure is that it is sheer speculation."
Meanwhile, according to Bloomberg, Tesco is weighing its options, including a sale or an initial public offering of Home plus, but it has yet to make a decision on how to proceed.
Reuters reported that Tesco plans to sell its Korean business in Hong Kong. Private equity firms such as KKR, Carlyle, CVC and TPG, as well as Asian buyout firms, including Seoul-based MBK Partners, could be interested bidders in the Korean business, according to Reuters.
A potential sale of Home plus comes after Tesco reported the biggest loss in British retail history in April and saw its credit rating cut to junk status by Moody's and S&P at the start of the year.
Tesco has more than 400 stores in Korea under the Home plus brand, as well as substantial operations in Thailand and Malaysia.
Tesco is coming under pressure to settle legal disputes caused by customer data sales by its Korean unit, Home plus, to insurance firms.
This comes as the ailing British retailer seeks to sell Home plus to improve its financial health.
Consumer groups have called for Tesco to come up with measures to duly compensate the affected Home plus customers, estimated to be 7.12 million. Home plus CEO Do Sung-hwan and several executives were indicted in February for reaping illicit gains by selling customers' data to insurance firms.
"We were taken aback after learning that Tesco is moving to sell Home plus with litigation still unsettled," the Korea National Council of Consumer Organizations said in a statement. "The primary thing to do is settling the case and the sale should come second."
To that end, the council pledged to take "all necessary" measures.
A question that remains unanswered is whether Home plus will be able to address the issue on its own ― and smoothly. To settle the case will cost Home plus a lot of money, thus it can't be done without Tesco's cooperation.
Yet, by some accounts, Tesco seems to have lost confidence in the Home plus chief, meaning a smooth settlement could be a pipedream. This raises concerns that Home plus could be plagued with labor and other disputes in the process of any sale.
Industry insiders said Do has fallen out of favor with Tesco's management in the wake of the customer data scandal and a labor-management dispute last year. They said Tesco's hiring of HSBC Holdings as lead manager for the sale was leaked to the media last week with Do not even being alerted to the decision by Tesco.
In fact, Do ruled out the possibility of Home plus's sale during a press conference in March, saying, "I have not been told about the sale of Home plus since I became CEO two years ago. What I can tell for sure is that it is sheer speculation."
Meanwhile, according to Bloomberg, Tesco is weighing its options, including a sale or an initial public offering of Home plus, but it has yet to make a decision on how to proceed.
Reuters reported that Tesco plans to sell its Korean business in Hong Kong. Private equity firms such as KKR, Carlyle, CVC and TPG, as well as Asian buyout firms, including Seoul-based MBK Partners, could be interested bidders in the Korean business, according to Reuters.
A potential sale of Home plus comes after Tesco reported the biggest loss in British retail history in April and saw its credit rating cut to junk status by Moody's and S&P at the start of the year.
Tesco has more than 400 stores in Korea under the Home plus brand, as well as substantial operations in Thailand and Malaysia.
