Tesco has confirmed the proposed sale of its 95.5% controlling stake in the Kipa business in Turkey to Migros.
The disposal, which is subject to usual local regulatory approvals, will result in estimated cash proceeds of around £30m, contributing to a reduction of around £110m in total indebtedness.
In a separate transaction, Tesco also announced its intention to sell the Giraffe restaurant chain to Boparan Restaurants Holdings. The sale of Giraffe includes 54 standalone restaurants, of which 12 are franchise sites, and 3 restaurants within Tesco stores.
Commenting on the sales, Tesco chief executive Dave Lewis said: “The sale of Kipa reflects the particular strategic challenge we have faced in Turkey, as a small regional player in a highly competitive market.
“It removes the need for the sustained investment required to enable the business to compete independently, allowing us to focus on improving profitability in Central Europe and continuing to grow our businesses in South East Asia.
“The sale agreement recognises the significant improvements in the performance of the business over the last 18 months and I would like to thank Kipa colleagues, suppliers and partners for their service during a period of considerable change.”
On the subject of Giraffe, he said: “As we stabilise the business in the UK, we continue to focus on where we can best serve the needs of our customers, while ensuring our business remains sustainable for the long-term.
“Giraffe is a much loved brand, and while casual dining remains an important part of the shopping trip for many of our customers, we will continue to meet these needs through our Tesco Cafés and other providers. I’d like to thank colleagues from Giraffe for all their hard work in serving our customers and we look forward to seeing it develop in the future.”