Tesco To Sell Giraffe And Turkish Chains

The UK's biggest retailer will announce this week that it is offloading its interests in Turkey and Giraffe as its chief executive accelerates its exit from underperforming businesses.

Sky News has learnt that Tesco (Xetra: 852647 - news) is close to agreeing the sale of Kipa in a move that will mark a further stage in its international retrenchment following the sale or closure of its operations in China, South Korea and the US.

Migros, another Turkish-owned retailer, is understood to be the buyer of Kipa, which Tesco acquired in 2003.

Dave Lewis, Tesco's boss, has also sanctioned the sale of Giraffe, which it has owned for just three years.

The chain is being sold to an unidentified family office vehicle which has existing restaurant assets in the UK, sources said.

Both deals could be unveiled as soon as Wednesday morning.

While they will represent another important step in Mr Lewis's efforts to tidy up Tesco's sprawling portfolio of businesses, they will not be material from a financial perspective, insiders said.

Tesco is likely to sell the Turkish business for "a couple of hundred million pounds", one analyst suggested on Tuesday night, while Giraffe would be "all but given away".

Many of the assets being sold by Mr Lewis were acquired by his two most recent predecessors: Sir Terry Leahy and Philip Clarke, who wanted to diversify the retailer's appeal and geographical reach in an attempt to emulate global peers such as Wal-Mart.

Tesco's other international operations, in markets such as Hungary, Poland and Thailand, are not on the auction block.

Mr Lewis also wants to sell peripheral businesses including Harris (Stuttgart: HRS.SG - news) + Hoole, the chain of coffee shops, and Dobbies, the garden centres business.

His clean-up of Tesco follows Mr Clarke's departure in 2014, when he was sacked after a string of profit warnings.

Shortly after Mr Lewis arrived, Tesco was forced to restate its profits, sending its shares tumbling and sparking a criminal probe by the Serious Fraud Office that has yet to conclude.

The company has begun to see a modest turnaround in its performance amid continuing competition with discounters Aldi and Lidl, and its more traditional rivals: J Sainsbury (Other OTC: JSAIY - news) , Wm Morrison and the struggling Asda.

Tesco declined to comment.