HONG KONG-Tesco, the giant British supermarket chain that last month sold off its U.S. businesses, is turning instead to China.
Tesco said on Wednesday it would pay 4.3 billion Hong Kong dollars ($554 million) to set up a new Chinese retail joint-venture with a state- run partner.
The British company will also fold its loss-making China operations â€" with 134 stores and assets of about $1.1 billion â€" into the partnership with China Resources Enterprise, a huge Chinese supermarket and convenience store operator with around 3,000 outlets in China and Hong Kong.
Tesco will license its brand and own a 20 percent stake in the new, combined venture, which will be one of the biggest supermarket chains in China.
‘‘Through this deal we have a strong platform in one of the world’s most exciting markets and it will move us more quickly to profitability in China,’’ Philip Clarke, the chief executive of Tesco, said in a statement Wednesday.
Hong Jie, the chief executive of China Resources Enterprise, said the new partnership would be ‘‘a compelling combination of local customer insights and international retail best practice, creating success and value for both groups, as well as propelling the internationalization of China’s retail industry.’’
China Resources Enterprise is also one of the companies that has been identified as a bidder for the billionaire Li Ka-shing’s Hong Kong supermarket chain, ParknShop â€" a sale that could command $3 billion to $4 billion. Executives at the state-run Chinese retailer have said they would consider partnering with Tesco in a joint bid for ParknShop.
Morgan Stanley and UBS are the financial advisers to China Resources Enterprise on the deal.
