Tesco retreats from global ambitions with sale of Polish business for €183.5m
18 June 2020 | 0
UK supermarket group Tesco is selling its Polish business for 819 million zlotys (€183.5 million), to focus on the Czech Republic, Hungary and Slovakia in the central European region.
In a press statement, Tesco said it had stronger market positions and better growth prospects in the three other countries.
The Salling Group, which also owns the Netto Group, is buying the 301-store Polish business.
Tesco said the proceeds would be used for “general corporate purposes”.
The retailer had struggled to gain market share in Poland, with higher costs than competitors. Tesco said it would also continue to try to sell 19 stores not included in the deal, after agreeing deals to sell 22 stores for net proceeds of £200m during the past 18 months.
The sale leaves Ireland and central European operations in the Czech Republic, Hungary and Slovakia as Tesco’s only remaining major non-UK operations.
Tesco has also exited Japan, South Korea, the US and Turkey in recent years. The latest of these sales took place in March when Tesco offloaded its south-east Asian operations in Thailand and Malaysia for $10.6bn (£8.5bn) in cash.
According to Tesco chief executive, Dave Lewis, the business had “seen significant progress in our business in central Europe but continue to see market challenges in Poland.
“Today’s announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the group,” Lewis added.
Former chief executive, Sir Terry Leahy, pioneered the group’s international expansion strategy. However, Tesco has since retrenched in a bid to reinforce its position as the UK leading grocer in revenue terms.
Previously, in 2015, Dave Lewis sold off the supermarket’s South Korean business.