10th Jun 2016 11:23
LONDON (Alliance News) - Tesco PLC on Friday said it is selling its UK restaurant chain Giraffe as well as its 95.5% stake in Turkish supermarket chain Kipa, adding to a string of non-core asset sales the grocer has been making to try to revive the business.
Giraffe is being sold to Boparan Restaurant Holdings Ltd for an undisclosed amount, although a Sky News report released on Thursday before Tesco confirmed the sale said the sale price was understood to be "a modest amount". The sale includes 54 standalone restaurants, of which 12 are franchise sites, and three restaurants within Tesco stores.
"As we stabilise the business in the UK, we continue to focus on where we can best serve the needs of our customers, while ensuring our business remains sustainable for the long term. Giraffe is a much loved brand, and while casual dining remains an important part of the shopping trip for many of our customers, we will continue to meet these needs through our Tesco Cafes and other providers," Tesco Chief Executive Dave Lewis said in a statement.
Tesco bought Giraffe in 2013 for GBP48.6 million under the leadership of then CEO Philip Clarke who wanted to diversify the business.
Clarke left Tesco in 2014 amid a scandalous period for the retailer which saw it admit serious accounting errors and profit overstatements, leading to a massive GBP6.33 billion pretax loss in its financial 2015 year. Clarke was replaced in 2014 by Lewis who embarked on a mission to rid the retailer of its loss-making non-core businesses in attempt to revive the company's fortunes.
The buyer of Giraffe, Boparan, is a vehicle of entrepreneur Ranjit Boparan and owns Harry Ramsden's fish and chip restaurants as well as upmarket Indian restaurant The Cinnamon Club. It is also the controlling shareholder in 2 Sisters Food Group, the owner of Goodfella's pizza and the UK's largest chicken supplier.
Meanwhile, the disposal of Kipa in Turkey will result in Tesco receiving cash proceeds of around GBP30 million. The grocer said the sale to Swiss retail company Migros will contribute to an overall debt reduction with a goal of around GBP110 million.
"The sale of Kipa reflects the particular strategic challenge we have faced in Turkey as a small regional player in a highly competitive market. It removes the need for the sustained investment required to enable the business to compete independently, allowing us to focus on improving profitability in Central Europe and continuing to grow our businesses in South East Asia," Lewis said.
In September last year, Tesco sold its Homeplus business in South Korea for GBP4.24 billion, prior to which the retailer closed down or sold all its video-on-demand Blinkbox businesses as well as its Tesco broadband unit.
Then in April this year, Tesco sold just over half of its stake in e-commerce platform Lazada Group SA to China's Alibaba Group Holding Ltd for USD129.0 million.
Rumours have been circulating for some time that Tesco is selling its Dobbies Garden Centres business and Harris & Hoole coffee shops.
After the sale of Lazada in April, Sky News reported that private equity-owned garden centre chain Wyevale had placed a GBP175.0 million bid for Dobbies, and later in May, The Times reported that retail billionaire Philip Day, the chief executive of Edinburgh Woollen Mill, also had tabled a bid.
Shares in Tesco were trading down 2.5% at 153.95 pence on Friday afternoon.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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