Tesco is breaking its decade-long pursuit of overseas organic growth with a record cash purchase of a chain of hypermarkets in South Korea. Financial Times, Daily Telegraph
Tesco is acquiring 36 stores owned by E-Land Group in and around Seoul for just under £1bn, including the assumption of existing debt.
This deal is the first time Tesco has spent anywhere near this kind of money on an international acquisition. Until now, it has preferred to grow from the ground up, through joint ventures with local partners and store-by-store growth.
But Phil Clarke, international director of Tesco, stressed that this did not herald a more radical era of expansion for the grocer.
He said: 'We prefer organic growth, that is always our priority and will remain so, but these 36 stores give us two and a bit years of growth in one hit. In four-and-a-half years in this job I have done two deals [the other being an asset swap with Carrefour]. I don’t see an acceleration of deals at all.'
It does show that Tesco is determined to gain pole position in chosen markets.
Korea is the retailer’s biggest market outside the UK, with £2.7bn of sales coming from 66 hypermarkets and 72 convenience stores. That turnover will be closer to £4bn once the deal goes through.