Tesco has agreed to sell its retail businesses in the Czech Republic and Slovakia to Ahold Delhaize at a total enterprise value of €1.7 billion (equivalent to £1.5 billion) on a cash and debt-free basis. The deal is expected to generate net cash proceeds of €1.2 billion (equivalent to £1.0 billion) before tax and other transaction costs, with completion anticipated in the second half of 2027, subject to antitrust and other regulatory approvals.
The two businesses generated combined sales of £2.9 billion and accounted for the majority of the £115 million adjusted operating profit reported for Tesco's Central European region in the prior 52-week period. The transaction covers all stores and offices in both countries, along with distribution centres in Kralupy, Presov and Beckov.
"I want to thank every colleague in the Czech Republic and Slovakia for the contribution they have made to Tesco over many years," said Ken Murphy, Chief Executive of Tesco. "For Tesco, the transaction will further simplify the Group, increasing our focus on our core UK and Irish businesses and supporting our continued investment in our food-first retail ecosystem and the capabilities that will drive future growth, while enabling a further return of capital to shareholders."
Following completion of the sale, Tesco expects to return the majority of net cash proceeds to shareholders through an incremental share buyback. The transaction is expected to be broadly neutral to earnings per share and the Group's net debt to EBITDA ratio after the buyback is complete.
Tesco's operations in Hungary are not included in the agreement and remain under the company's ownership. The group noted it will continue to review options for its Hungarian business. Since 2021, and prior to this disposal, Tesco has raised approximately £0.5 billion from the sale of non-core property assets in Central Europe, including a number of large shopping malls.
Goldman Sachs and Citi are acting as joint financial advisors to Tesco, with A&O Shearman serving as legal advisor.
