Tesco has confirmed the proposed sale of its 95.5 per cent controlling stake in the Kipa business in Turkey to Migros and, in a separate transaction, its intention to sell the Giraffe restaurant chain to Boparan Restaurants Holdings Ltd.
The disposal of Kipa, which is subject to regulatory approvals, will result in estimated cash proceeds of around £30 million ($57.5 million), contributing to a reduction of around £110 million ($211 million) in total indebtedness.
Tesco CEO Dave Lewis says the sale of Kipa reflects the particular strategic challenge the company has 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,” he said.
“The sale agreement recognises the significant improvements in the performance of the business over the past 18 months.”
The sale of Giraffe includes 54 standalone restaurants, of which 12 are franchise sites and three 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,” Mr Lewis said.
“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 Cafés and other providers.”