Shares in Tesco (LON:TSCO) rose after the supermarket giant said it will sell its Czech Republic and Slovakia businesses to Ahold Delhaize (AMS:AD) for an enterprise value of £1.5 billion.
The transaction is expected to generate net cash proceeds of roughly £1 billion for Tesco. Significantly, it marks the latest step in the British grocer’s retreat from international markets. Once the deal completes in H2 2027, Tesco plans to return the bulk of the proceeds to shareholders through a buyback.
Terms of the deal
The deal includes all stores and offices in the Czech Republic and Slovakia. Furthermore, it encompasses distribution centres in Kralupy, Presov and Beckov.
In FY26, Tesco’s Czech Republic and Slovakia operations generated combined sales of £2.9 billion. They spoke for the majority of the £115 million adjusted operating profit reported for the Central European region.
While the deal with Ahold Delhaize does not include Tesco’s business in Hungary, the unit could be sold before long. ‘We will continue to review all options for the future of our business in Hungary,’ teased Tesco.
What did Ken Murphy say?
‘It has been a privilege to serve customers and invest in colleagues, stores and supply chain in the Czech Republic and Slovakia,’ said Tesco CEO Ken Murphy. ‘And we are proud of what has been achieved over the past 30 years. I am delighted that Ahold Delhaize intends to invest in both markets.’
Focusing on the core
Murphy added. ‘For Tesco, the transaction will further simplify the group, increasing our focus on our core UK and Irish businesses and supporting our continued investment in our food-first retail ecosystem and the capabilities that will drive future growth, while enabling a further return of capital to shareholders.’
Last month, Tesco increased the size of its share buyback and nudged its profit guidance higher. The announcement outweighed disappointing like-for-like sales for Q2 of FY27.
| Tesco, H1 highlights | H1 27 | H1 26 | Change (%) |
| Sales ex VAT, ex fuel (£m) | 33,776 | 33,051 | +2% |
| Adjusted operating profit (£m) | 1,783 | 1,674 | +6.5 |
| Free cash flow (£m) | 1,570 | 1,298 | +21 |
Source: Tesco, interim results
Tesco cautioned that while consumer confidence was resilient in H1, ongoing geopolitical tensions were creating uncertainty. However, Murphy insisted his focus remained on helping customers ‘get the best value’ from their weekly shop.
In our view, this deal is a win-win for the two supermarket operators. Tesco needs to sharpen its focus on the core UK & Ireland operations. Keep in mind, UK like-for-like sales growth was weaker in Q2 than Q1 reflecting the firm’s loss of market share.
Over the past decade, Tesco has sold a number of its overseas businesses. And these disposals left the Central European operation as one of its last significant outposts beyond the UK & Ireland.
Since 2021, Tesco has released roughly £0.5 billion from the sale of non-core property assets in Central Europe.
The deal will enable Dutch food retailer Ahold Delhaize to increase its scale in the Czech Republic, where it already operates the Albert chain. In addition, it will establish Ahold Delhaize as a significant player in the attractive Slovakian market.
