Tesco’s Acquires 128 Czech Convenience Stores for $52.8 Million

Tesco Plc, the U.K.’s largest retailer, bought 128 Zabka and Koruna convenience stores in the Czech Republic for 1.02 billion koruna ($52.8 million) to cement its position in the eastern European nation.

The acquisition from Penta Investments Ltd., a central European private equity firm, is subject to regulatory approval, Eva Karasova, a spokeswoman for Tesco, said from Prague.

Tesco had sales of 1.28 billion pounds ($1.97 billion) in the Czech Republic in the last fiscal year, making the country its fifth-largest in Europe by revenue. 

The 47 Koruna stores and 81 Zabka franchised kiosks will bolster Tesco’s Express format, the retailer said. The U.K. company has 173 outlets in the Czech Republic, where the grocery market is worth $50 billion a year.

“This step is part of Tesco’s long-term strategy,” Philip J. Clarke, head of the Cheshunt, England-based retailer’s Czech unit, said in an e-mailed statement. “This step will allow us to tap a fast-developing segment of the retail market.”

Tesco rose 1.45 pence, or 0.3 percent, to 433.45 pence at 10:20 a.m. in London trading and has gained 1.3 percent in 2010.

The acquisition doesn’t include Penta Investments’ Zabka outlets in Poland. Penta will decide on a possible initial public offering or direct sale of Zabka Polska SA in the first quarter of 2011, saidJozef Janov, director of the Czech-Slovak investment firm. A potential deal may exceed 500 million polish zloty ($165 million), according to Janov.

Zabka runs 2,350 stores in the Czech Republic and Poland, adding 650 outlets in the last three years. 

The company forecast full-year revenue of 2.5 billion zloty compared with 1.5 billion zloty in 2006. Earnings before interest, tax, depreciation and amortization probably rose to 120 million zloty in 2010 from 46 million zloty in 2006, Penta said on Dec. 21.

BC Partners Ltd. and Mid Europa Partners filed final bids for Zabka Polska SA, three people with knowledge of the process said earlier this week.

To contact the reporters on this story: Sarah Shannon in London at sshannon4@bloomberg.net; Ladka Bauerova in Prague at lbauerova@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.