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Source:
Guardian; Tesco buys stake in Turkish chain; April 18, 2003
Tesco
is continuing its global expansion with an announcement that it has agreed
to buy a stake in the Turkish supermarket group, Kipa.
On
Wednesday, Britain's biggest supermarket chain signed a deal to buy 84.33 %
of Kipa's group A shares.
Kipa
has five stores in Türkiye and is the leading retailer in the Aegean area.
Yesterday Tesco offered no comment as to whether it wanted to buy the
company outright. However, the two companies have agreed on a valuation of
$117.7m (£75m) for the entire share capital of Kipa. Kipa's share price
fell 4.29 % to 13,000 Turkish lira (0.5p), with the main index down 0.15%.
Some brokers had expected a higher price.
Although
this is Tesco's first foray into Türkiye, the company has a presence in
many of the world's emerging markets, especially south-east Asia and
eastern Europe. It is also looking at opportunities in Japan and China. The
deal is expected to be completed later this year and is subject to a number
of unspecified conditions.
But
Turkish stock market rules mean an announcement must be made at each stage
of any possible venture. Tesco has been forced to move abroad to expand as
its 26% market share in Britain precludes it from any major growth in this
country.
This,
however, has not stopped the company bidding for rival supermarket Safeway,
along with its competitors Asda, Sainsbury's and Morrisons. The bids are
undergoing a competition commission inquiry.
If
Tesco's bid is successful, it would have to sell a number of stores as it
has 200 areas of overlap with Safeway.
The
office of fair trading is due to announce its results on August 12. Last
week Tesco announced annual results that confirmed its position as the leader
in the UK's competitive market.
Like
for like sales were 4.1% higher in the year to February 22; full year
profits grew 13.% to £1.3bn; international sales were worth £5.2bn.
At
the time, chief executive Sir Terry Leahy said: "What we have seen in
the last year is a return to a more normal level of growth across the
industry.
"This
is a time where there will be winners and losers."
Tesco
will also create 20, 000 more jobs this year with the planned opening of 26
new outlets.
The
group's share price closed up 2p at 195p.
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