The Carrefour and Tesco Swap Deal

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Case Details:

Case Code : BSTR285
Case Length : 14 Pages
Period : 1989-2005
Pub Date : 2008
Teaching Note :Not Available
Organization : Carrefour, Tesco
Industry : Retail
Countries : Taiwan, Czech Republic, Slovakia

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"After the group's (Carrefour's) exit from Mexico and Japan, we are not surprised for one moment by this fresh exit from two central European countries."¹

- Guy Francheteau, Retail Analyst, Fideuram Wargny², in 2005.

"Strategically, this is the right thing for Tesco to do; to have a market-leading position in central Europe is more important than having a presence in Taiwan."³

- Sanjay Vidyarthi, Retail Analyst, Teather & Greenwood⁴, in 2005.

Tesco and Carrefour Swap Stores

In October 2005, two of the world's top retailers, UK-based Tesco Plc (Tesco) and France-based Carrefour SA (Carrefour), entered into a deal that involved swapping their stores in some countries. Under the terms of the deal, Tesco was to take over Carrefour's stores in the Czech Republic (11 stores) and in Slovakia (4 stores).

In exchange, Carrefour would take over six stores and two of Tesco's sites in Taiwan. Carrefour's stores in the Czech Republic and Slovakia were valued at € 189.4 million, and Tesco's Taiwanese operations were valued at € 132 million. Tesco agreed to pay Carrefour the difference of € 57.4 million.

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1] "Tesco and Carrefour to Swap Shops," news.bbc.co.uk, September 30, 2005.

2] France-based Fideuram Wargny is the brokerage arm of Banca Fideuram SpA.

3] Mark Potter, Caroline Brothers "UK's Tesco in Store Swap with France's Carrefour," Reuters, October 01, 2005.

4] Teether & Greenwood is a UK-based institutional and corporate stockbroker. In 2007, the operations of Teether & Greenwood were combined with the UK-based investment bank, Bridgewell Plc.

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