Tesco swaps overseas assets with French retailer Carrefour

LONDON: The UK-based stores chain Tesco today agreed with French international rival Carrefour to swap stores in countries where they have low market share.

Under the deal, Britain’s leading retailer will hand over six stores and two sites in Taiwan to Carrefour. It will also pay £39 million to the French group. The value of the exchange, including debt and equity, would total approximately £130 million.

For Tesco, parting with the Taiwan assets means effectively exiting from Taiwan where it lacked “critical size” and had been struggling to get a foothold, a spokesman said. The British retailer had similarly exited from France in 1997.

In exchange for the Tesco assets and the sum, Carrefour will part with its 11 outlets in the Czech Republic and four in Slovakia.

Both the retailers have an overseas presence with Carrefour ranked as the world’s second largest stores chain after US-based Wal-Mart. Lagging far behind, Tesco still makes 20 percent of its revenues from its stores in China, Malaysia, South Korea and Thailand.

With Carrefour’s Czech and Slovak stores, Tesco will be able to further strengthen its position in Eastern Europe. The store believes these regions to be highly competitive and offering good scope for growth.

Tesco is believed to have made “significant investment” in price cuts in its stores in these two countries during the last 12 months. It runs 25 stores in the Czech Republic and 30 in Slovakia and now plans a multi-format approach to widen the revenue scope. It will open hypermarkets, compact supermarkets and stores offering both food and non-food merchandise as part of the plan.