Tesco and CRE sign Memorandum of Understanding

RNS Number : 3317L

Tesco PLC

09 August 2013

 

News release…

Friday 9^th August 2013

Tesco and CRE sign Memorandum of Understanding to create

the leading multi-format retailer in China

Noting recent media speculation, Tesco Plc ("Tesco") and China Resources Enterprise, Limited ("CRE") today announce that they have entered into a Memorandum of Understanding and are in exclusive talks to combine their Chinese retail operations to form the leading multi-format retailer in China.

The partnership would bring together CRE's deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities.  The proposed joint venture would create a business with sales of some £10bn, in which CRE and Tesco's effective interests are expected to be 80% and 20% respectively.

It would involve CRE combining its CR Vanguard business, which currently operates 2,986 stores across China and Hong Kong, with Tesco China's 131 stores and shopping mall business.

The intended partnership follows a series of highly successful joint ventures between CRE and other multi-national corporations and is consistent with Tesco's stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets, with a disciplined approach to the allocation of capital.

The transaction is subject to further due diligence and agreement of final terms.  There is no certainty that a transaction will occur.

We will update the market with further details as and when appropriate.

Contacts

 

Investor Relations:    Chris Griffith           01992 644 800

Media:                       Tom Hoskin            01992 644 645

                                  Brunswick              0207 404 5959

NOTES TO EDITORS:

CR Vanguard was established in 1999 and has rapidly built out a strong portfolio of well-recognised and leading formats, to become the largest multi-format retailer in China by sales.  The business has an established nationwide infrastructure, with a portfolio of 2,986 stores covering 24 provinces which together have a population of approximately 1.1 billion.  CR Vanguard is owned by CRE, a Hong Kong-listed company.   A majority of CRE's shares are held by China Resources Holdings (a state owned entity).

Tesco has grown its footprint in China from 56 stores five years ago to 131 stores today. Currently, Tesco is present in 9 provinces, with particular emphasis in the fast growing Shanghai, Tianjin and Liaoning provinces.  Tesco China also includes the Lifespace shopping mall business, with six malls currently operational and further schemes under development.

 

END

 

 

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