The owners of Lidl are reported to be among the front runners to acquire dozens of Tesco stores as the British supermarket group seeks buyers for parts of its European business.
Schwarz Group is expected to submit an offer for Tesco’s Czech and Slovakian businesses, according to the Financial Times. Ahold Delhaize and Biedronka are also planning to submit bids, the newspaper reported.
Tesco plans European retreat
Tesco is planning to sell its entire European division outside the UK and Ireland. The division generated £4.5bn in revenue and £115m in adjusted profit last year.
According to Tesco’s most recent financial report, the grocer operates 566 stores in central Europe: 200 in Hungary, 184 in the Czech Republic and 182 in Slovakia.
The potential sale would add the Czech Republic and Slovakia to the markets from which Tesco has retreated over the past 15 years. Those markets include France, Japan, Malaysia, Poland, South Korea, Thailand, Turkey and the United States.
Tesco wrote down the value of one of its Slovakian stores by £75m and noted the challenges posed by the market’s competitive intensity.
Potential change in strategy
A potential sale of the European operations would represent a significant change from chief executive Ken Murphy’s previous description of the business as an integral part of the group.
Murphy said in 2023 that Tesco’s operations in Hungary, the Czech Republic and Slovakia were a successful part of the group and did not distract much from its core business.
Tesco holds a 28.2 per cent share of the UK grocery market, which the article says is more than double the combined share of its nearest competitors, Sainsbury’s and Asda. Lidl has more than an eight per cent share, making it the UK’s sixth-largest grocer and putting it within touching distance of overtaking Morrisons.
Source: City AM
