Tesco confirms sale of Kipa, Giraffe

The FTSE 100 firm said it has agreed to sell its 95.5% controlling share in Turkish supermarket chain Kipa to Swiss retail group Migros.

It confirmed that the disposal, which remains subject to the usual local regulatory approvals, will result in estimated cash proceeds of £30m and contribute to a reduction of around £110m in total indebtedness.

In a separate transaction, Tesco confirmed it is also selling the Giraffe restaurant chain which it picked up in 2013, to Harry Ramsden’s owner Boparan Restaurants Holdings.

The dale of Giraffe includes 54 standalone restaurants - of which 12 are franchised - and three restaurants within Tesco stores.

“The sale of Kipa reflects the particular strategic challenge we have faced in Turkey as a small regional player in a highly competitive market, said Tesco chief executive Dave Lewis.

He explained that it removes the need for the sustained investment required to enable the business to compete independently, and allows Tesco to focus on improving profitability in Central Europe and grow operations in South East Asia.

“The sale agreement recognises the significant improvements in the performance of the business over the last 18 months and I would like to thank Kipa colleagues, suppliers and partners for their service during a period of considerable change.”

On the Giraffe sale, Lewis said it reflected Tesco’s move to focus on where it can best serve the needs of its UK customers while ensuring the business remains sustainable for the long term.

“Giraffe is a much loved brand, and while casual dining remains an important part of the shopping trip for many of our customers, we will continue to meet these needs through our Tesco Cafés and other providers.

“I'd like to thank colleagues from Giraffe for all their hard work in serving our customers and we look forward to seeing it develop in the future,” Lewis added.