Tesco share price: Joint venture with India’s Tata confirmed

on Mar 21, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Friday, March 21: Tesco (LON:TSCO) has confirmed an agreement with a unit of India’s steel-to-software conglomerate Tata Group to form a 50:50 joint venture.

The UK’s largest retailer said in a statement today that that following receipt of approval from the Indian Foreign Investment Promotion Board (FIPB) (Tesco share price: Grocer’s India expansion given green light), it has entered into a deal with Trent Limited to form an equal partnership with the operator of the Star Bazaar retail business, Trent Hypermarket Limited.

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On completion of the deal, subject to other necessary approvals, Trent Hypermarket will operate 12 stores selling a range of items from food and grocery to home and fashion. The stores trade under the Star Bazaar and Star Daily banners, and are spread across the Southern and Western regions of India, Tesco noted, adding that the size of its investment will be around £85 million.

The joint venture with Tata follows on from a wholesale and franchise agreement that Tesco signed with the Indian group in 2008. The British supermarket chain currently supplies around 80 percent of the goods in Tata’s 16 Star Bazaar and Star Daily stores.
The new partnership is a bold move for Tesco, which has a strong international presence, but has had to pull out of overseas markets before, including its loss-making US Fresh & Easy chain, which it offloaded to YFE Holdings Inc, the affiliate of Yucaipa Companies LLC. The UK-based retailer also offloaded its ailing Japanese operations in 2012 to rival chain Aeon in a £40 million deal, but in China, Asia’s biggest economy, it injected £345 million into a joint venture with state-owned China Resources Enterprise, to combine their Chinese retail operations.

**Tesco share price falls after milk advert fail**
Shares in Tesco have fallen today. The stock — whose consensus analyst rating is ‘hold’ with an average price target of 241.24p — stood 0.82 percent lower at 290.10p as of 13:21 UTC.
Meanwhile, the supermarket chain was forced to scrap an advertising campaign after it used the wrong breed of cow in one of its milk adverts.

The posters, designed to highlight a drop in the price of a four-pint bottle of milk – a discount, which prompted an industry price war earlier this month (Morrisons share price: Company joins supermarket milk price war) — displayed pictures of a breed of cattle farmed exclusively for beef production rather than milk.
The mistake was first spotted by farmers. A spokesman for Tesco said in a statement that the advert had been axed and would be replaced with one featuring dairy cows. He added that he could not put a number on how many incorrect posters had been produced, but remarked that the campaign had been nationwide. The spokesman did not reveal how much the gaffe had cost the company.
**As of 13:18 UTC, buy Tesco shares at 290.20p.**
**As of 13:18 UTC, sell Tesco shares at 290.15p.**


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