Tesco is set to pull the plug on plans to sell off its data arm Dunnhumby, but is preparing to offload its central and eastern European business.
- Tesco struggling to agree price for Dunnhumby
- Grocer’s data arm is now worth as little as £500m
- But sale of eastern European stores could raise £3bn
The final serious contender to purchase Dunnhumby, advertising agency WPP, is struggling to agree a price for the business that created the grocer’s Clubcard loyalty scheme.
But Tesco chiefs hope to soften that blow by pressing ahead with the sale of its eastern European stores, which could fetch up to £3bn.
It comes after city sources told the Sunday Times that WPP has raised concerns about Tesco’s contract with Dunnhumby, which is up for review in 2020.
Other interested bidders had already voiced reservations over Dunnhumby’s ability to grow in the US, after US supermarket chain Kroger acquired most of its US operation back in April.
Tesco had been hoping to secure around £2bn by selling off its data business, but it is now estimated to be worth as little as £500m.
Balance sheet
The supermarket giant’s boss, Dave Lewis, has made protecting and strengthening the balance sheet a key priority since taking the helm last September and is ready to press ahead with the sale of its eastern European operations to help achieve that strategic aim.
Tesco is understood to have held preliminary talks with a host of private equity firms as it explores the possibility of offloading its Polish, Czech Republic and Slovakian businesses.
The grocer has previously warned of pressures on its central European stores as a result of changes to tax rules in Hungary.
Lewis has already sold off Tesco’s Korean Homeplus business for £4.2bn to a consortium led by MBK Partners, in what was Asia’s largest ever private equity deal.
The sale, which is expected to be completed during the fourth quarter of Tesco’s financial year, will help plus a £22bn black hole in the supermarket giant’s battered balance sheet.
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