UK – Tesco has announced the sale of its business in Poland, which includes of 301 stores together with the associated distribution centres and head office to the Salling Group, owned by Denmark-based Salling Foundations, in a transaction valued at £181 million (US$224.48m)
The transaction, which is subject to antitrust approval, is expected to close in the current financial year. The retail giant said that the proceeds from the sale will be used for general corporate purposes.
Commenting on the sale, Dave Lewis, Chief Executive of Tesco, said: “We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland.
“[This] announcement allows us to focus in the region on our business in the Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the Group.
Despite managing to transform the Poland business into two-format business within two, Lewis said that the retailer “sees this transaction as the best way to secure the future of the business for our colleagues and customers in Poland.”
In addition, the group noted that it has made good progress in selling its remaining Polish property outside of this transaction. Over the past 18 months, the Group has either sold or agreed to sell 22 stores for net proceeds of £200m.
Lewis noted that the retailer will continue to seek to realise value from the remaining assets, which include 19 currently trading stores not covered in the transaction with Salling Group.
After costly exits from Japan and the United States and the sale of its South Korean business, Tesco signalled in December last year a further retreat from its once lofty global ambitions by starting a review of its operations in Thailand and Malaysia, including an evaluation of a possible sale of these businesses.
In March this year, the British multinational grocer entered into a conditional agreement to sell its business in Thailand and Malaysia to a combination of CP Group entities for an enterprise value of US$10.6 billion (£8.2 billion).
At the time, the Group said that the sale would enable a stronger focus on its retail businesses in the UK and Ireland and in Central Europe and allow the company to further de-risk the business by reducing indebtedness through a significant pension contribution of £2.5billion (US$3.27 bn).
In February, the company also sold its 20% stake in Gain Land to a subsidiary of its joint venture partner, China Resources Holdings for £275 million (US$375m).
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