British supermarket chain Tesco to pay $700m for firm to take over outlets in China
HONG KONG (AP) - British retail giant Tesco is paying a Chinese state-owned company US$558 million (S$700 million) to take over its supermarkets in China after failing to make headway on its own since entering the country a decade ago.
Tesco's 134 Chinese stores and its shopping mall business are being vacuumed up by China Resources Enterprises, which is the supermarket leader with nearly 3,000 stores across the country. In exchange, Tesco gets a 20 per cent stake in a joint venture with China Resources that will operate the combined retailing businesses.
The China business of Tesco, Britain's biggest retailer by sales, suffered a pre-tax loss of 222 million pounds (S$451 million) in its most recent financial year. The year before, it lost 125 million pounds.
"Through this deal we have a strong platform in one of the world's most exciting markets and it will move us more quickly to profitability in China," Tesco chief executive Philip Clarke said on Wednesday.