Tesco in talks on future of Turkish business

Mon Feb 24, 2014 6:01am EST
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By Daren Butler and James Davey

ISTANBUL/LONDON (Reuters) - Tesco (TSCO.L: Quote), the world's No. 3 retailer by sales, is in talks with several companies over a possible restructuring of its struggling business in Turkey.

The British retailer has been in Turkey since 2003 but has suffered poor trading from its 191 stores recently, with underlying sales at Tesco Kipa (KIPA.IS: Quote) falling 10.7 percent in its second quarter to the end of August.

Last October, Tesco said its business in eastern Turkey could be restructured, but it would not exit the country.

Under pressure to turn around falling sales in its main domestic market, Tesco has done deals to sort out problem businesses in Japan, the U.S. and China and analysts have speculated that Turkey could be next.

"Tesco is in the first stages of talks with various companies regarding various options," Tesco Kipa said in a statement to the Istanbul stock exchange on Monday.

It did not name any of the companies or any of the options. A spokesman for Tesco declined to elaborate.

Kipa's statement was prompted by a Financial Times report on Friday, citing people familiar with the situation, which said Tesco was looking at combining its operations in Turkey with the country's biggest food retailer Migros (MGROS.IS: Quote).

Migros is owned by private equity firm BC Partners.   Continued...

A shopper passes a Tesco supermarket in London October 5, 2011. REUTERS/Luke MacGregor