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Tesco clubcard offers reduced massively in value


Prospective private equity firms looking to bid for the Tesco unit which operates its Clubcard are ready to reduce the value of their offers massively, following the restructuring of one of its largest contracts.

According to Sky News, bidders who are interested in acquiring Dunnhumby began holding meetings Tesco last week and have since sashed their projected valuations of the company from £2bn to around half that total.

It is understood that those bidders were informed that a renegotiation of Dunnhumby's relationship with Kroger, the US retailer, meant that the profitability of the business that is being marketed for sale is now a considerably lesser amount.

Some sources said that pre-tax profits had halved to approximately £70m as a consequence of the restructured contract, while others suggested that the fall was meaningful but not as steep as a 50% decline.

Tesco declined to comment on the profitability numbers or the wider process, citing commercial confidentiality, although one insider told Sky News that the £70m figure was "in the right ballpark".

Published on Tuesday 02 June by Veebs Sabharwal

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