SEOUL (AFP) - The South Korean unit of British giant Tesco said Wednesday it has agreed to buy debt-stricken discount retail chain Homever for 1.86 billion dollars.

Samsung Tesco Homeplus president Lee Seung-Han said the acquisition of the 35 Homever stores, owned by fashion retailing group E-Land, would cost 1.95 trillion won.

But the deal required a total of 2.3 trillion won (2.2 billion dollars) including potential debts, he said.

"Homeplus is a very competitive company and can quickly normalise the operation of Homever," Lee said.

The agreement nullified an earlier deal under which European private equity fund Permira would invest 400 billion won in E-Land, he said.

Homeplus, a joint venture between Tesco and South Korea's top conglomerate Samsung, is the country's second largest retail chain with 66 stores.

Homever the company has been plagued by poor sales and labour disputes since E-Land bought it from French retailer Carrefour in 2006. It posted a net loss of about 200 billion won last year on sales of 1.57 trillion won.

E-Land president Kwon Sun-Moon said the deal would help the company focus on its fashion business.

"We plan to invest in Chinese and Indian (fashion) markets. We will also try to acquire a foreign brand probably in the United States," he said.

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