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Citing information from Mergermarket and a source in the mergers and acquisitions market, E15 said Tesco had hired Citigroup and Goldman Sachs to advise on the planned sale of its Central European businesses.
According to E15, an official sales document is already being circulated among potential buyers and advisers. The newspaper said the document went beyond an initial teaser and included the proposed transaction structure, key financial indicators and forecasts.
Tesco reportedly plans to sell its Czech and Slovak operations together in one package, while offering its Hungarian business separately.
The Czech-Slovak package comprises 363 stores, while Tesco operates 198 stores in Hungary, according to the report.
E15 did not provide financial data, a proposed valuation or the names of potential buyers specifically for the Hungarian operation.
The report said Tesco’s Czech business employs around 7,000 people and generated revenue of EUR 1.6 bln last year, with sales forecast to rise by EUR 200 mln this year. Revenue in Slovakia is expected to remain at around EUR 1.7 bln in both years.
EBITDA at the Czech operation stood at EUR 75 mln last year and is expected to remain at that level this year. In Slovakia, EBITDA amounted to EUR 120 mln last year and is projected to fall to EUR 100 mln this year.
The report said a sale could prove complex because Tesco operates several store formats and potential buyers may be interested in only selected parts of the network.
Schwarz Group, the owner of Lidl and Kaufland, was named by Mergermarket as a possible bidder for the Czech-Slovak package. However, competition concerns and the group’s already extensive store network could complicate such a transaction.
Polish retailer Biedronka, which is expanding in Slovakia, was also identified as a possible successor, although analysts cited by E15 said the full package could require substantial capital.
The article estimated that Tesco’s Czech business alone could be valued at around EUR 600 mln, or CZK 14.5 bln, based on a valuation of more than eight times EBITDA.
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