A Czech business paper has reported on how the British-owned supermarket chain Tesco may pull out of Hungary, with its Hungarian interests potentially being sold soon by well-known financial services firms.
Tesco to leave Hungary — and not just us
Another concrete step may have been taken towards the possible sale of Tesco’s Central European interests. According to reports, the British supermarket chain has hired two major American investment banks, Citigroup and Goldman Sachs, to prepare the sale, the Czech business daily e15 reports.
A particularly important detail from the Hungarian Tesco perspective is that, under the current plans, the Hungarian network would not be sold together with the Czech and Slovak stores. The interests in the three countries could instead be offered in two separate packages.
According to the report, which was also summarised by Portfolio, the two investment banks have already sent documentation to potential buyers. This suggests the matter may have moved beyond the stage of merely weighing up a possible sale: the materials sent out also set out the companies’ financial position, prospects and the planned structure of the disposal.
According to Tesco’s data published in June, showing the position at the end of February, it operated 200 stores in Hungary, 184 in the Czech Republic and 182 in Slovakia. The British chain has been present on the Hungarian market since 1995 and employs more than 8,000 people in the country.
Who could the buyers be?
The Czech and Slovak store networks are reportedly to be sold together. Potential buyers are said to include the Schwarz Group, owner of Lidl and Kaufland, as well as Poland’s Biedronka. There is as yet no information on which companies might be interested in the Hungarian business. Tesco, Citigroup and Goldman Sachs have neither confirmed nor commented on the reports. They have not denied them either.
Retail giants such as Spar, Aldi and Tesco may quit Hungary this year
If the sale of the Central European interests does in fact go ahead, it would mark a significant shift in Tesco’s strategy. Chief executive Ken Murphy was still describing the regional business as an integral and successful part of the group in 2023. Behind the scenes, the company may be increasingly focused on the British market. In the ferocious competition there, against Asda and Morrisons, it could gain an advantage if it were able to use money from the Central European sale to cut prices.
For the British company, dismantling overseas interests would not be unprecedented. In recent years it has withdrawn from several markets, including Poland, one of the region’s major economies. A sale of further Central European interests and a retreat from the region would therefore fit the direction Tesco has taken in recent times.
The first reports of the possibility of a regional withdrawal surfaced at the beginning of July. At the time, the Financial Times reported that the company was examining the sale of its Central European interests. On the basis of the latest information, it appears that what was then only being floated has since moved into the preparation stage.
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