Offer for C Two-Network Japan

Tesco PLC
10 June 2003


10 June 2003

                                   TESCO PLC

                      ANNOUNCES RECOMMENDED CASH OFFER FOR

                             C TWO-NETWORK IN JAPAN

Tesco PLC today announces a recommended cash tender offer for C Two-Network Co.,
Ltd. (C Two-Network), a Japanese retailer.

Sir Terry Leahy, Chief Executive, welcoming the agreed deal, said:

'The acquisition of C Two-Network is the next step in our international strategy
for long term growth. We first signalled that we would be researching Japan in
2000.

'C Two-Network is a profitable value retailer with good stores in good
locations, run by a young management team.

'C Two-Network is a great success in Japan and will provide Tesco with an
excellent opportunity to enter a large and unconsolidated market with potential
for growth.

'We are confident that by combining Tesco's retailing capability and the
strength and local knowledge of the C Two-Network team we can grow the business
further'.

    Summary

   •The offer values C2 Network at £139 million net of cash balances of
    £34million.

   •The deal will be earnings enhancing in its first full year.

   •C Two-Network is valued at approximately 50% of its sales.

   •This cash offer has been recommended by the board of C Two-Network.

   •The offer represents a small and thoughtful entry into an exciting, but
    complex and challenging market.

   •C Two-Network is a convenience retailer with stores well adapted to the
    daily shopping pattern of Japanese consumers.

   •Japanese customers will benefit from a combination of Tesco's retail
    experience of all store types and C Two-Network's local knowledge of
    customers and sourcing.

   •The current management will remain and will work with Tesco's management
    to manage this profitable company going forward.

   •Shareholders will be offered JPY 3,400 per share in cash; this represents
    a 35% premium on the three-month average closing price up to, and including,
    June 9 2003 and a 27% premium on the closing price of the June 9 2003.

   •C Two-Network's Board and key managers representing 41.01% of the company
    share capital have agreed to accept the offer.

                                     -ends-
Contacts

Press:

Lucy Neville-Rolfe,Tesco PLC - [phone]

Angus Maitland, The Maitland Consultancy - [phone]


Analyst:

Steve Butler, Tesco PLC - [phone]


Attached is the translated release that has been issued in Japan 15:00 local
time.


EMBARGOED UNTIL 07.00AM, UK, 3.00PM JAPAN, 10 June 2003

        Tesco PLC to enter Japan through tender offer for C Two-Network

                   C Two-Network board expresses full support

Tesco PLC (Tesco) today announces that, through its subsidiary Tesco Holdings
BV, it is launching a cash tender offer to purchase all the issued shares of C.,
Two-Network Co. Ltd.(C Two-Network), a food retailer operating 78 stores
together with some wholesaling activity. C Two-Network operations are mainly in
the Tokyo metropolitan area. The Board of Directors of C Two-Network has
expressed its full support for the offer and recommended the offer through a
resolution passed today.

Mr Inaida, the largest single shareholder of C Two-Network (holding 24.95%), his
relations (holding 1.40%) and YK Projet Deux (holding 9.01%), in which he is a
major shareholder, have agreed to accept the tender offer. Members of C
Two-Network's management (holding 5.65%) have also agreed to tender their
shares.

Under the terms of the tender offer, which commences June 11, 2003, Tesco will
offer a price of JPY 3,400 in cash for each share in C Two-Network, giving a
total consideration of JPY 32.8billion (£173 million at the exchange rate of
JPY190:£1). This represents a premium of 35% over the average daily close of the
past 3 months up to, and including, June 9 2003. The tender offer will run for a
period of 30 days, closing on July 10, 2003. Tesco will purchase all shares
tendered to it, conditional on it receiving enough tenders to bring its
shareholding in C Two-Network to a minimum of 66.7%. The successful completion
of this tender offer may result in the delisting of C Two-Network from the Tokyo
Stock Exchange. It is Tesco's ultimate intention to acquire 100% of the issued
shares of C Two-Network.

Both companies share a similar management approach, corporate culture and
retailing vision. It is the intention of Tesco that C Two-Network will continue
to be managed by the current management team, with the support and guidance of
the Tesco Group, following the successful conclusion of the tender offer.

Tesco Chief Executive Sir Terry Leahy commenting on the deal, said, 'The
acquisition of C Two-Network is a continuation of our international strategy for
long term growth. C Two-Network provides Tesco with an excellent opportunity to
enter a large and unconsolidated market where we have potential to grow. C
Two-Network is a profitable value retailer with good stores in good locations,
run by a young management team. We are confident that by combining Tesco's
retailing capability and the strength and local knowledge of the C Two-Network
management team we can effectively grow the C Two-Network business'

Mr. Inaida, Chief Executive Officer of C Two-Network said, 'C Two-Network
reported record earnings for the fiscal year ending March 2003; this was
achieved by providing a strong customer offer through good management and
innovation. We are confident that Tesco's skills will assist us in our plans to
accelerate the growth of the C Two-Network business and further improve our
operating performance. Tesco's proven ability to partner with local operators,
combined with our shared values and vision has led us to support this Tender
Offer Bid. In addition the current management will remain and work with Tesco's
management to manage the company after the Tender Offer.'

The deal will allow Tesco to gain a greater understanding of Japanese customers
and suppliers. It will provide C Two-Network with an opportunity to share
Tesco's global vision, perspectives, resources and management style to enhance
its on-going business strategy and achieve even higher levels of customer
satisfaction. The transaction, once completed, will be earnings enhancing for
Tesco in the first full year.

About Tesco

Tesco is the number one food retailer in the UK and also operates in other areas
of Europe (Republic of Ireland, Hungary, Czech Republic, Slovak Republic and
Poland) and Asia (Thailand, South Korea, Taiwan and Malaysia), employing nearly
300,000 staff. It operates 2,291 stores globally ranging from large hypermarkets
to small convenience stores. Tesco has a four-part customer focussed strategy
for growth. This encompasses its strong core UK business, non-food growth,
retailing services and international businesses.

About C Two-Network

C Two-Network was founded as a wholesale business. In 1994, using its previous
experience and know-how C Two-Network entered the Japanese food retail sector. C
Two-Network trades under the brand names Tsurukame, Tsurukame Land, Foodlet and
Kamechuru. It now operates 78 stores, many of which are in the Tokyo
metropolitan area. Food retail operations now account for 87% of sales
(including Foodlets). With stores ranging from 100sq metres-1000sq metres, C
Two-Network's focus is on the retailing of packaged foods (grocery and
refrigerated) through supermarkets with tenant fresh food operators. Its
consistent strength in product procurement has allowed it to increase both
revenues and profits for 11 consecutive years. For the most recent year, ending
March 31, 2003, it reported record revenues and operating profits of JPY 54.3
billion (£286 million) and JPY 3.9 billion (£20.5 million) respectively.

Japan Inquiries

Media:

Ross Rowbury, Gavin Anderson & Company ([phone]

Minako Hattori, Gavin Anderson & Company ([phone]

Analyst:

Ms. K. Fujita, C TWO-NETWORK CO., LTD. ([phone]

U.K. Inquiries

Media:

Lucy Neville-Rolfe, Tesco PLC -  [phone]

Analyst

Steve Butler, Tesco PLC - [phone]

Tender offer agent for the transaction is Daiwa Securities SMBC. Tesco is being
advised by Goldman Sachs (Japan) and KPMG Corporate Finance provided independent
financial advice to C Two-Network.

Goldman Sachs (Japan) is acting for Tesco and no-one else in connection with the
acquisition of C Two-Network and will not be responsible to any other person for
providing the protections afforded to clients of Goldman Sachs (Japan) or for
providing advice in relation to the acquisition of C Two-Network.



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