Tesco raises stake in Korean venture

Tesco, Britain's largest retailer, is set to increase its majority stake in its South Korean joint venture with Samsung to 99 per cent by 2011.

Tesco, Britain's largest retailer, is set to increase its majority stake in its South Korean joint venture with Samsung to 99 per cent by 2011.

It will buy an additional 10 per cent of Homeplus from Samsung over the next seven years for about £200m. The companies have agreed a price range of £40m to £60m for the first 5 per cent to be acquired in July 2007. The remaining 5 per cent stake will change hands in July 2011.

A spokesman for Tesco said: "We are extending a very successful joint venture with Samsung. We are very excited about the future growth prospects in Korea. We have a very successful local management team there which looks at the needs of customers and how we can best serve them."

Since the creation of the joint venture in 1999, when Tesco purchased a controlling 51 per cent interest in Homeplus from Samsung, the business has grown rapidly to become one of South Korea's leading retailers. It has 30 hypermarkets and two Super Express stores.

With price competition intensifying at home, Tesco has expanded outside Britain since 1995. Three of its five biggest stores are in Asia - two in South Korea and the third in Thailand. Almost half of the company's floor space is outside the UK.

The retailer is set to add between 5 per cent and 6 per cent of floor space this year, with nearly 3 million square feet abroad, the spokesman said. In Asia, where Tesco is competing with the likes of Wal-Mart and Carrefour, it has 210 stores and plans to add more than one million square feet of space this financial year. As well as South Korea and Thailand, the company has a presence in Japan, China, Malaysia and Taiwan. The spokesman would not speculate on where Tesco would go next, but said: "We're looking at growing the existing markets."

Tesco said this week that it planned to triple the number of stores in Taiwan to 12 by 2006.