Tesco share price: Company ends Turkey business discussions without deal

on May 27, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Tuesday, May 27: Tesco’s (LON:TSCO) talks with various companies on partnership options for its Turkey business ended without a deal, the company’s Turkish subsidiary, Tesco Kipa, said in a statement to the Istanbul Stock Exchange today.

Over the past three months, Britain’s largest grocery retailer had been in talks with several companies over a possible restructuring of its struggling business in Turkey, where it has been present since 2003 but has suffered poor trading recently from its 191 stores. Tesco was considering various potential options for its Turkish unit, which most likely included a joint venture, similar to the deal that the company has struck with Tata in India (Tesco share price: Joint venture with India’s Tata confirmed), or a partnership similar to the arrangement with China Resource Enterprises (CRE) in China.

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According to inside sources, Tesco Kipa was in talks with local supermarket group Migros Ticaret AS and beverage company Anadolu Endustri Holdings AS about possible combinations. However, no agreement has been reached.
In a separate statement published today, Tesco reaffirmed the outcome of its subsidiary’s discussions: “Tesco has confirmed today that it has ended talks with various parties in respect of potential options for its business in Turkey.” The FTSE 100-listed group further remarked: “We are committed to driving value from all our businesses and, for Kipa, we believe that this is best achieved by accelerating our plans to focus the business on its heartlands, minimise capital spend and improve profitability,”

“It’s disappointing they can’t find a partner, but not altogether surprising given the poor results from the country,” Andrew Gwynn, an Exane BNP Paribas analyst, said as quoted by Bloomberg. “In terms of options, they could start by closing some of the underperforming stores, but there are a lot of them,” he added.

Turkey was Tesco’s worst-performing international unit in its last financial year, with same-store revenue dropping seven percent. Sales in the country improved in the fourth quarter, increasing 1.7 percent on the same basis.
A Tesco spokesman declined to comment on the failed discussions and the suggested plans of the group to trim the number of its Turkish stores.

**Tesco share price declines**
Despite this morning’s higher opening, Tesco’s share price had lost 0.39 percent to 302.95p by 09:58 BST.
Of the 18 analysts projecting 12 month price targets for Tesco for The Financial Times, the median target is 291.00p, with a high estimate of 360.00p and a low estimate of 230.00p.
**As of 09:39 BST, buy Tesco shares at 302.95p.**
**As of 09:39 BST, sell Tesco shares at 302.90p.**


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