Tesco Japanese subsidary acquires supermarket business

Supermarket giant Tesco's Japanese subsidiary, C Two Network Co (C2), is to acquire the privately-owned Tokyo neighbourhood supermarket business of Fre'c.

The transaction is being co-ordinated by the Industrial Revitalisation Corporation of Japan (IRCJ) - which purchases non-performing loans of viable but indebted companies - and is conditional upon successful restructuring of Fre'c's debt with the IRCJ's support.

C2 has been appointed by the IRCJ to sponsor the rehabilitation of Fre'c (Fresh and Cost).

The proposed transaction will take the form of a demerger of Fre'c's supermarket business of 27 stores and related assets into C2.

C2 will assume net debt of approximately Japanese yen 3.0bn (€24.12m) as part of the consideration.

The process is expected to complete in August 2004 and will be funded from C2's existing financial resources.

The proposed transaction is consistent with C2's growth strategy in recent years, which has been driven by a combination of organic growth and selective acquisitions.

Tesco acquired C2 in July 2003 and now controls 77 profitable stores mainly in the Tokyo metropolitan area.