Tesco expects €1.2 billion from sale of Czech and Slovak businesses
Key Facts
Tesco announced a proposed agreement on 30 October 2026 to sell its businesses in the Czech Republic and Slovakia to Ahold Delhaize, expecting net cash proceeds of €1.2 billion, equivalent to £1 billion, before tax and other transaction costs. Chief Executive Ken Murphy said the deal would “further simplify the group,” as the company refocuses on its core businesses in the UK and Ireland. Tesco expects to return most of the net proceeds to shareholders through an additional share buyback after the sale is completed. The company said the buyback would be broadly neutral to earnings per share and the ratio of net debt to earnings before interest, tax, depreciation and amortisation. Completion remains subject to antitrust and other regulatory approvals, with the second half of 2027 targeted for closing.
The deal includes all Tesco stores and offices in the two countries, along with distribution centres in Kralupy, Prešov and Beckov. In the previous 52-week financial year, the Czech and Slovak operations recorded combined sales of £2.9 billion. The two operations accounted for most of the Central Europe region’s adjusted operating profit of £115 million over the same period. The network comprises more than 360 company-operated stores and more than 100 franchise stores, according to Ahold Delhaize. The company estimated the businesses’ annual sales at about €3.5 billion, and said they employ more than 14,000 people. These figures show the scale of the operations that will transfer to the buyer upon completion of the agreement.
Ahold Delhaize said the deal’s enterprise value is about €1.7 billion on a lease-adjusted basis, while the stated value without this adjustment is about €1.2 billion. The lease-adjusted valuation represents 7.2 times last-12-month earnings before interest, tax, depreciation and amortisation, according to the company. The multiple falls to 5 times when expected synergies are included. Ahold Delhaize also expects the combined “Albert” and “Tesco Czech” brand to become the Czech Republic’s leading grocery retailer by market share after the deal is completed and the store portfolio is reshaped. That outcome remains contingent on completion of the sale and plans to integrate the two businesses.
The deal is in line with Tesco’s move to simplify its operations outside its main market. Reuters reported that the company had been investing heavily in Britain, where its market share was approaching 28% at the time of the agency’s report on 30 October. The sale agreement did not include Tesco’s Hungarian business, and the company said it would continue to review all options for its future there. In its latest operating results, free cash flow in the first half of financial year 2026/27 rose to £1.570 billion, compared with £1.298 billion in the first half of 2025/26. Adjusted diluted earnings per share also increased 12.2% to 17.3 pence, from 15.4 pence in the corresponding period. These results provide financial context for the deal as Tesco shifts its focus to its core businesses.
Bernstein analysts said the deal price appeared high, adding: “We think the deal price looks high, so we are inclined to be more positive about its implications for Tesco than for Ahold.” Reuters reported that Tesco shares were up 1.2% by 09:47 GMT on 30 October, with gains of about 21% since the start of 2026 at the time of its report. At the latest close available in the evidence, the shares ended the 2 November session at 545 pence, up 0.93% from the 30 October close of 540 pence. The available information does not include a documented share-price move in the 3 November session. Completion of the deal in the second half of 2027 remains subject to regulatory and antitrust approvals.