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Technology

Tesco Moves Closer to Dunnhumby Sale After Kroger Agreement

Tesco moved a step closer to the possible sale of Dunnhumby after the data-analytics business parted ways with Kroger after twelve years to allow it to work exclusively with other US retailers.

Supermarket chain Kroger will acquire Dunnhumby USA’s data-mining technology and more than 500 of its staff, forming a new wholly-owned company called 84.51°, the retailer said in a statement Monday. Stuart Aitken, who previously led Dunnhumby USA, will become chief executive officer of the new company, which will be based in Kroger’s hometown of Cincinnati.

The new company will still use Dunnhumby’s analytical tools under a licensing agreement, yet Dunnhumby will no longer have access to Kroger’s customer data, Kroger said. Dunnhumby will now be free to pursue new business opportunities with other US retailers and consumer-product manufacturers without Kroger’s involvement. Financial terms of the new arrangement were not disclosed.

Tesco, the UK’s biggest supermarket company, is considering selling Dunnhumby as part of a plan to reduce £21.7 billion ($33 billion) of debt. Analysts estimate the unit may fetch as much as £2 billion.

“This removes a stumbling block to selling Dunnhumby, and also adds a potential additional revenue stream,” John Kershaw, an analyst at Exane BNP Paribas, said in a note. “The opening up of the North American market looks appealing and should help bolster the price bidders may be willing to pay.”

Kroger and Dunnhumby created their American joint venture in 2003, according to Dunnhumby’s website, and its clients have included Macy’s Inc. and Procter & Gamble Co.

Bloomberg News, edited by ESM

 

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