British supermarket giant Tesco exits China with US$357 million sale of stake to state-owned partner
- Having struggled to crack the Chinese market, Tesco established the Gain Land venture with China Resources Holdings in 2014
- The move follows costly exits from Japan and the United States and the sale of its South Korean business
Britain’s biggest retailer, Tesco, has completed its exit from China with the £275 million (US$357 million) sale of its joint venture stake to state-run partner China Resources Holdings (CRH).
Having struggled to crack the Chinese market, Tesco established the Gain Land venture with CRH in 2014, combining the British group’s 131 stores in China with its partner’s almost 3,000 outlets.
The disposal of its 20 per cent stake allows Tesco to further simplify and focus the business on core operations, it said on Tuesday, adding that the proceeds will be used for general corporate purposes.
The deal is scheduled to be completed on February 28.
Shares in Tesco were up 0.7 per cent at 8.16 am GMT, extending its gains over the last year to 12.4 per cent.
“This extra £275 million of ‘forgotten value’ should be accretive to most street valuations,” said Bernstein analyst Bruno Monteyne.