The proposed joint venture would create a business with sales estimated at £10bn, in which Tesco and CRE’s effective interest is expected to be 20% and 80% respectively.
The partnership would involve Tesco combining its 131 Chinese stores and shopping mall business with CRE’s CR Vanguard chain of supermarkets, which currently operates 2,986 stores across China and Hong Kong.
‘Established nationwide infrastructure’
Tesco said in a statement: “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.”
Tesco added that the partnership was consistent with its strategy of focusing on profitable routes to growth in fast-growing but less mature markets, with a disciplined approach to the allocation of capital.
The partnership follows a series of successful joint ventures between CRE and other multi-national corporations, Tesco claimed.
The transaction is subject to further due diligence and the agreement of final terms.
Tesco was unable to confirm whether or not there would be opportunities for UK food and drink manufacturers to supply to the business.