Tesco extends overseas retreat with Czech and Slovak sale

By Yamini Kalia and James Davey

LONDON, Oct 30 (Reuters) - Tesco, Britain's biggest food retailer, said on Friday it would sell its Czech and Slovak businesses to Dutch peer Ahold Delhaize for an enterprise value of €1.7 billion ($1.9 billion), extending its withdrawal from overseas markets.

The British grocer said it expected to return the majority of net cash proceeds of €1.2 billion before tax and other transaction costs to shareholders through an incremental share buyback.

Shares in Tesco were up 1.2% by 0947 GMT, extending 2026 gains to 21%.

"We think the deal price looks quite expensive, and would therefore be more positive on the implications for Tesco than we would for Ahold," analysts at Bernstein said.

CENTRAL EUROPEAN OPERATIONS SEEN AS AN ANOMALY

Analysts have long viewed Tesco's Central European division, which also includes Hungary, as an anomaly, given that the group has since 2015 divested nearly all of its overseas assets, including businesses in South Korea, Thailand and Malaysia, to focus on the UK market.

The Czech Republic and Slovakia generated sales of £2.9 billion ($3.9 billion) and the majority of the £115 million adjusted operating profit reported for the Central European region in the 2025/26 financial year - about 4% of total group profit.

"The transaction will further simplify the Group, increasing our focus on our core UK and Irish businesses," Tesco CEO Ken Murphy said. "I am delighted that Ahold Delhaize intends to invest in both markets," he added.

The Dutch group already has operations in the Czech Republic, where it operates the Albert supermarket chain.    

Completion of the deal, which is subject to antitrust approvals, is expected in the second half of 2027.

Tesco said it will continue to review "all options" for the future of the Hungary business.

Tesco has been investing heavily in its home market, where it has a market share of about 28%. Sales growth did, however, slow in its second quarter.

($1 = 0.8930 euros)

($1 = 0.7456 pounds)

(Reporting by Yamini Kalia in Bengaluru and James Davey in London; Editing by Sonia Cheema, Kirsten Donovan)