Japan's Aeon interested in buying Tesco's Malaysia unit -sources

* Tesco (Xetra: 852647 - news) 's Malaysia business worth 900 mln pounds -sources

* Malaysia arm's net profit grew 73 pct last year (Adds Aeon speaking to banks, Tesco share price, byline)

By Yantoultra Ngui

KUALA LUMPUR, July 7 (Reuters) - Japan's Aeon Co Ltd is interested in buying the Malaysian operations of Britain's Tesco PLC, valued at about 900 million pounds ($1.4 billion), people familiar with the matter told Reuters.

Japan's largest retailer has been venturing into Southeast Asia where purchasing power is rising in fast-growing economies. In contrast, growth has been hampered at home by deflation, sluggish consumer spending and a shrinking population.

It bought the Malaysian arm of French retailer Carrefour SA (Paris: FR0000120172 - news) in 2012 for 250 million euros ($275 million) and last year expanded e-money services in Thailand.

Buying Tesco's operations would make Aeon Malaysia's biggest hypermarkets group. The Japanese retailer has 28 hypermarkets in the country and plans to open 100 more stores in various formats by 2020. Aeon also owns 51.7 percent of Aeon Co M Bhd, which has 29 outlets and four MaxValu supermarkets in Malaysia.

Tesco is currently seeking buyers for its $6 billion South Korean business and a stake in data-gathering arm Dunnhumby, to fund a turnaround in its home market. Britain's biggest retailer is recovering from an accounting scandal and the loss of market share to discount chains Aldi and Lidl.

Aeon, which started out selling traditional kimono clothing in the late 1700s, is keen to buy Tesco's Malaysian unit and has informally discussed its interest with corporate advisers, one person familiar with the matter said.

"It's still in the very early stage," said one of the people. "It would only come after they (Tesco) are done with South Korea and Dunnhumby."

The people declined to be identified as they were not authorised to speak with media on the matter.

Tesco, which has not expressed any intention to sell its Malaysian business, declined to comment. A spokesman for Aeon said the company was not in negotiations with Tesco.

However, another source familiar with the matter said Aeon had been calling investment banks to discuss advisory roles. No adviser has yet been appointed, the source added.

"The sale of the South Korean unit will buy Tesco some time, so they could delay any further action until around March next year," this source said.

Tesco shares were trading down 1.6 percent by 1040 GMT.

A spokesman for Sime Darby Bhd, which owns 30 percent of Tesco's Malaysian arm, said the Malaysian plantation-to-autos conglomerate would always evaluate opportunities that may enhance shareholder value.

Sime Darby's latest annual report showed Tesco operates 49 stores throughout Malaysia. Net profit rose 73 percent to 82.2 million ringgit ($21.6 million) last year, on revenue that rose 1.1 percent to 4.65 billion ringgit, the report showed.

($1 = 0.6434 pounds)

($1 = 0.9088 euros)

($1 = 3.8060 ringgit) (Reporting by Yantoultra Ngui in KUALA LUMPUR; Additional reporting by Neil Maidment and Freya Berry in LONDON, Ritsuko Shimizu and Emi Emoto in TOKYO, Anshuman Daga in SINGAPORE; Editing by Denny Thomas, Christopher Cushing and Mark Potter)