29th May 2014 09:09
London (Alliance News) - British supermarket Tesco on Thursday said it had completed a deal with state-run China Resources Enterprise to create the Asian country's largest food retailer.
Tesco, which has failed to impress Chinese customers with its solo stores, will now merge its roughly 130 supermarkets in the country with the 3,000 Vanguard supermarkets owned by state-run CRE.
CRE chief executive Hong Jie said the deal was a "major milestone for our business development" and the joint venture would lead to "improved operations, better growth and enhanced profitability."
His counterpart at Tesco, Philip Clarke, described the venture as a "historic agreement" and said it created "a strong platform in one of the world's largest markets."
CRE will own 80% of the new business, and Tesco, which is investing GBP345 million (USD577 million) in it, will hold 20%. The British supermarket will also have two seats on a board with a maximum of 10 members.
In March, Tesco also announced it would invest GBP85 million in a 50-50 joint venture in India with Tata-owned Trent Hypermarket Ltd, which runs the Star Bazaar hypermarket chain.
Copyright dpa
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