Possible China merger for Tesco

Following talks of a merger in China, Tesco could see its brand disappear from the country.

Britain’s biggest retailer ended speculation last week by revealing it had entered into a Memorandum of Understanding with China Resources Enterprise Limited (CRE). The talks could lead the two businesses to combine their Chinese retailing operations into one “leading multi-format retailer” in China. The proposal could also ratchet-up around £10bn in sales.

Tesco has said the partnership would bring together CRE’s “deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco’s global retail expertise, international sourcing scale and supply chain capabilities”.

If plans are successful, CRE will combine its CR Vanguard business with Tesco’s 131 Chinese stores and shopping malls, creating a joint force of 3,117 stores across China and Hong Kong.

Yet the plans are not bespoke to the relationship and would follow other joint ventures between CRE and other multinational companies.

However, Tesco added: “The transaction is subject to further due diligence and agreement of final terms. There is no certainty that a transaction will occur.”

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