Turkish supermarket chain Tesco Kipa announced this morning that its parent company is holding preliminary negotiations with a private equity firm regarding its future.
The Financial Times first reported on the potential move last Friday, which sparked speculation in Turkey over the weekend. This morning, shares in Kipa jumped 9.3% to 4.23 lira in early trading after the company released a statement to the Istanbul Stock Exchange declaring "Tesco Plc is in the first stages of talks with various companies regarding various options."
Tesco acquired Turkey’s Kipa chain in 2003, expanding the business to 191 stores in 20 cities.
Britain’s largest retailer, which is attempting to turn around its struggling UK chain, is in early stage discussions with BC Partners, which could lead to the pair forming a joint venture in Turkey. Coincidentally, BC Partners, the London private equity house, owns a majority stake in Turkey's largest retailer, Migros.
"As a private equity company, BC Partners periodically evaluates various alternatives for all its existing investments including Migros as part of the normal flow of its activities," Migros said in a statement to the Istanbul bourse on Monday.
The proposed merger would effectively help Tesco exit Turkey, where sales slumped 3.5% in the third quarter of 2013, against a backdrop of declining sales in each of the supermarket group’s international markets.
"As a private equity company, BC Partners periodically evaluates various alternatives for all its existing investments including Migros as part of the normal flow of its activities," Migros said in a statement to the Istanbul bourse on Monday.
Tesco is almost two years into a £1 billion plan in it's home market, where it generates two-thirds of its revenues but has been losing ground after focusing investment on overseas expansion.
© 2014 - European Supermarket Magazine by Enda Dowling
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