Tesco eyes majority stake sale of data unit Dunnhumby - source

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By Neil Maidment

LONDON, Feb 9 (Reuters) - Britain's biggest retailer Tesco Plc is pursuing the sale of a majority stake in its data-gathering arm Dunnhumby, rather than an outright exit or flotation, a source familiar with the situation told Reuters on Monday.

Tesco (Xetra: 852647 - news) said in January it would slash costs and sell assets to fund lower prices and mend its finances, as new boss Dave Lewis plots the supermarket's fight back from years of market share losses, an accounting scandal and debt-ratings downgrades.

As part of that plan, Goldman Sachs (NYSE: GS-PB - news) was appointed to explore strategic options for Dunnhumby, which analysts value at between 800 million pounds ($1.2 billion) and 2 billion.

"Tesco wouldn't want to 100 percent exit from Dunnhumby", the source, who did not wish to be named, said. "And I don't think there would be any sort of flotation."

"It would either be a trade or strategic buyer, or private equity buying a majority stake and Tesco keeping the rest."

Tesco declined comment.

Dunnhumby, which was bought by Tesco in 2004, gathers and analyses data from almost 1 billion shoppers globally to help firms create customer loyalty and personalisation programmes.

The data is behind Tesco's successful Clubcard loyalty scheme and is also sold to clients including Coca-Cola, Unilever (NYSE: UL - news) and Nestle (VTX: NESN.VX - news) .

By remaining involved in Dunnhumby, Tesco would stand to benefit from another party investing in the company to develop the industry's next wave of data. A total Tesco exit could hurt Dunnhumby's value and would also mean the supermarket could not preclude certain companies from using the firm.

Around six or seven parties, including private equity-led consortiums, have shown a serious interest in the business, the source said, although talks are still at early stages.

Lewis said last month Clubcard remained "a very strategic and very important part" of the Tesco proposition. Dunnhumby generates around 500 million pounds in annual revenue and around 100 million of profit.

Lewis has already sold loss-making Blinkbox Movies to TalkTalk and Blinkbox Music to Guvera. Both businesses were considered non-core.

The CEO is conducting a full review of Tesco's global asset portfolio, though he has said there is no need for a "fire sale", given the firm's liquidity and funding.

Shares (Berlin: DI6.BE - news) in Tesco, which are down 28 percent on a year ago but up 14 percent since Lewis' Jan. 8 strategy update, were up 0.8 percent to 230.70 pence at 1557 GMT, valuing the business at around 18.7 billion pounds.

($1 = 0.6572 pounds) (Additional reporting by James Davey; Editing by Kate Holton and David Holmes)