TIDMTSCO

RNS Number : 2990Q

Tesco PLC

18 June 2020

Tesco PLC ("Tesco")

18 June 2020

Tesco agrees sale of business in Poland

Tesco today announces 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 GBP181m), with total net proceeds expected to be approximately PLN 819m (equivalent to GBP165m), 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.GBP200m. The Group will continue to seek to realise value from the remaining assets, which include 19 currently trading stores not covered in this transaction.

Notes:

-- 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 GBP1,368m and an operating loss before exceptional items of GBP(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 GBP947m and a loss before tax of GBP(107)m including exceptional items (principally restructuring and impairment costs).

-- The 301 stores in Poland being sold had gross assets of GBP681m 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:GBP1.00 (19/20 YTD Average FX) for P&L items, PLN5.034:GBP1.00 (19/20 Closing FX) for Balance Sheet items and PLN4.962:GBP1.00 based on the 5 day average of daily mid-point rates for the transaction terms.

Enquiries:

 
  Tesco 
  Investor Relations     Chris Griffith            +44 (0) 1707 940 900 
  Media                  Simon Rew                 +44 (0) 330 6780 639 
   Philip Gawith (Teneo)                           +44 (0) 207 420 3143 
 
    Barclays Bank PLC, acting through 
    its Investment Bank 
    (Sole Financial Adviser and Corporate 
    Broker)                                          +44 (0) 20 7623 2323 
  Alisdair Gayne 
  Omar Faruqui 
  Osman Akkaya

Important notices relating to financial advisers

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Tesco and no one else in connection with the matters described herein and will not be responsible to anyone other than Tesco for providing the protections afforded to clients of Barclays nor for providing advice in relation to the matters described herein or any other matter referred to in this announcement .

LEI Number: 2138002P5RNKC5W2JZ46

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END

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