Tesco close to deal to merge operations in China

9th Aug 2013 07:04

Tesco is in exclusive talks to combine its operations in China with local chain Vanguard to create a business with sales of some 10bn pounds.The UK supermarket group said it had entered a memorandum of understanding with Vanguard's parent company China Resources Enterprises but that the transaction was still subject to further due diligence and agreement of final terms.A deal would combine Tesco's 131 stores and shopping mall business in China with Vanguard's 2986 stores across China and Hong Kong. It would be 80% owned by CRE and 20% owned by Tesco.It would enable Tesco to capitalise on CRE's knowledge of local customers and nationwide infrastructure. Tesco said: "There is no certainty that a transaction will occur. We will update the market with further details as and when appropriate."CRE is a Hong Kong listed company with the majority of its shares held by state-owned China Resources Holdings. TB