Lidl owner reportedly readies Czech and Slovak Tesco bid

Schwarz joins the reported race for Tesco’s Czech and Slovak stores

Schwarz Group, the German family-owned retailer behind Lidl and Kaufland, is reportedly preparing to bid for Tesco’s businesses in the Czech Republic and Slovakia. Retail Insight Network reported the prospective offer, citing Financial Times reporting based on unnamed sources.

The potential transaction forms part of Tesco’s effort to sell its continental European operations. Retail Insight Network puts the division’s revenue last year at £4.5bn, with adjusted operating profit of £115m. Tesco operates 561 stores across its eastern European markets; that total covers the wider regional business, not just the two countries Schwarz is reportedly targeting.

Schwarz may face competition from Ahold Delhaize, the Dutch supermarket group, and Biedronka, the Polish discount chain owned by Jerónimo Martins. Both are also said to be preparing offers, according to Retail Insight Network. The reported interest points to a potential contest between established grocery operators rather than an agreed acquisition.

Tesco’s overseas retreat reaches a three-decade European business

Tesco’s continental European division is its only substantial operation beyond the UK and Ireland, according to Retail Insight Network. Selling it would therefore narrow the British grocer’s geographical footprint significantly, rather than simply remove a small peripheral business.

The company’s regional history began in Hungary, where Tesco opened its first European store in 1995. Retail Insight Network reports that competition has intensified across its eastern European markets, providing the commercial backdrop to the disposal process.

Tesco has already withdrawn from several other international markets. Its loss-making US venture, Fresh & Easy, closed in 2013. The retailer then sold its South Korean business for £4.2bn in 2015 and its operations in Thailand and Malaysia for £8bn in 2020, according to Retail Insight Network. Those exits establish a longer-running shift away from the overseas portfolio Tesco once assembled.

Hungary’s prime minister puts retail restrictions under review

Government policy adds another consideration for the Hungarian business. Retail Insight Network reports that price caps and levies introduced under former Hungarian prime minister Viktor Orbán put pressure on Tesco, with the measures directed at foreign-owned retail chains.

Those restrictions remain in place under current prime minister Péter Magyar, according to the outlet. Magyar said earlier in the month covered by the report that the policy was being reviewed because of its effects on Hungarian farmers. That stated review concerns the wider impact of retail intervention; the source reports no decision to remove the measures.

Separate sale processes lead towards first-round bids

Tesco has appointed Goldman Sachs and Citi to manage the sale of its Central European division, which spans Hungary, the Czech Republic and Slovakia, Retail Insight Network reports. The Czech and Slovak operations are being marketed separately from Hungary, allowing bidders to pursue those businesses without taking on all three markets.

First-round bids were expected by the end of the month in which the report appeared, according to the Financial Times account relayed by Retail Insight Network. Other bidders could still enter the process. That timetable concerns initial offers, not a final agreement or a completion date.

For retailers considering European expansion, the separation of Hungary from the Czech and Slovak assets makes the scope of any acquisition a central issue. An offer for two national businesses would represent a different market commitment from buying Tesco’s entire regional division. The next bidding stage should begin to clarify which businesses prospective buyers want, while the reported Hungarian policy review remains a separate consideration.