JAPAN: Tesco prepares Japan exit with Aeon JV
- Tesco plans phased exit of Japanese market
- Aeon will take 50% of Tesco Japan
- Tesco to invest GBP40m in JV prior to full withdrawal
Tesco details Japan exit strategy
Tesco has confirmed details of its planned withdrawal from the Japanese market, which was initially announced last year.
Through its formation of a joint venture with Japanese retailer Aeon, the company will gradually hand over control of its Japanese operations. The deal allows Tesco to cap its exposure to Japan with the agreed investment of GBP40m (US$62.7m) to restructure operations.
While Tesco does not publish earnings details for individual countries, it is believed the unit is loss-making and analysts have estimated the group made a loss in the region of GBP11m in fiscal 2011.
The move is a reflection of the difficulties associated with retailing in Japan: the highly-competitive, well-developed retail landscape has been shaped by poor consumer sentiment and a bleak economic landscape for a number of years and retailers have seen sales stagnate as a consequence.
Click here for further comment from Tesco and the thoughts of Shore Capital analyst Clive Black on the move.
TESCO ANNOUNCES DEAL WITH AEON IN JAPAN
18th June 2012
In line with its previous announcement, Tesco has today entered into an agreement with Aeon, Japan's largest retail group.
Tesco will exit Japan in a two stage process. In the first phase Tesco will sell 50% of its shares in Tesco Japan to Aeon for a nominal sum. This will result in the formation of a joint venture with Aeon. As part of this, Tesco will invest a further c.£40m as a joint venture partner to finance further restructuring, after which Tesco will have no further financial exposure to the Japanese business or its operations.
Philip Clarke, Chief Executive Officer of Tesco Plc, said: "I thank our colleagues in Japan, who have done an excellent job for the business - in particular over recent months. We are very pleased to announce this deal with Aeon today, and are confident that this will deliver the best outcome for our staff, for our customers in Japan and for our shareholders."
Completion of this transaction is subject to usual regulatory approval.
Original source: http://www.tescoplc.com/index.asp?pageid=17&newsid=650
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