Tesco plc (LON:TSCO) has announced the sale of its business in Poland to Salling Group A/S. The transaction, which is subject to antitrust approval, includes the sale of 301 stores together with the associated distribution centres and head office.
Commenting on the sale, Dave Lewis, Chief Executive of Tesco, said:
“We have 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.
I would like to thank all of our Tesco Poland colleagues for their dedication to serving customers in Poland over many years. The energy and commitment they have shown over the past two years transforming Tesco Poland to a two-format business has been incredibly impressive. We see this transaction as the best way to secure the future of the business for our colleagues and customers in Poland”.
Total enterprise value agreed for the transaction is PLN 900m (equivalent to £181m), with total net proceeds expected to be approximately PLN 819m (equivalent to £165m), settled in cash, with completion expected in the current financial year. Proceeds from the sale will be used for general corporate purposes.
In addition, the Group has made good progress in selling its remaining Polish property outside of this transaction. Over the past 18 months, the Group has either sold or agreed to sell 22 stores for net proceeds of c.£200m. The Group will continue to seek to realise value from the remaining assets, which include 19 currently trading stores not covered in this transaction.
· Salling Group A/S is 100% owned by the Salling Foundations from Denmark and serves 11 million customers every week across Germany, Poland and Denmark, with 50,000 colleagues and an annual turnover of approximately GBP 7bn.
· Tesco Polska generated sales exc. VAT and PFS of £1,368m and an operating loss before exceptional items of £(24)m in the 2019/20 financial year.
· In the 2019/20 financial year, the 301 stores in Poland being sold generated sales exc. VAT and PFS of £947m and a loss before tax of £(107)m including exceptional items (principally restructuring and impairment costs).
· The 301 stores in Poland being sold had gross assets of £681m at the end of the 2019/20 financial year.
· All 301 stores included in the transaction will be rebranded during an 18-month transition period.
· Figures presented in GBP use the following exchange rates: PLN4.926:£1.00 (19/20 YTD Average FX) for P&L items, PLN5.034:£1.00 (19/20 Closing FX) for Balance Sheet items and PLN4.962:£1.00 based on the 5 day average of daily mid-point rates for the transaction terms.