The UK’s largest supermarket chain Tesco is to enter the Japanese food retail market, having made an offer to buy convenience-store chain C Two-Network for £173m (US$285.8m).
Tesco said it had made a recommended offer of ¥3,400 (US$28.8) per share in cash for C-Two Network, which operates a profitable chain of 78 stores, many of which are situated in the Tokyo metropolitan area.
“The acquisition of C Two-Network is the next step in our international strategy for long term growth. We first signalled that we would be researching Japan in 2000,” Sir Terry Leahy, Tesco’s chief executive said.
“C Two-Network is a great success in Japan and will provide Tesco with an excellent opportunity to enter a large and unconsolidated market with potential for growth.
“We are confident that by combining Tesco’s retailing capability and the strength and local knowledge of the C Two-Network team we can grow the business further,” he added.
Japan’s retail market is notoriously tough as deflation, a slumping economy and a crowded market make conditions for foreign retailers difficult. Despite this, US retail giant Wal-Mart jumped into the market last year with its alliance with local retailer Seiyu. Other foreign retailers, including Germany’s Metro, have also recently made moves into Japan.
For the most recent year, ending 31 March, C-Two Network reported record revenues and operating profits of ¥54.3bn and ¥3.9bn respectively. The company was founded as a wholesale business, but entered the Japanese food retailer sector in 1994. C Two-Network trades under the brand names Tsurukame, Tsurukame Land, Foodlet and Kamechuru.