Tesco’s Japanese subsidiary, C Two Network Co., Ltd. (C2) today announced plans to acquire the neighbourhood supermarket business of Fre’c, a privately owned Japanese company. Fre’c operates mainly in the Greater Tokyo area.
The transaction is being co-ordinated by the Industrial Revitalisation Corporation of Japan (IRCJ), and is conditional upon successful restructuring of Fre’c’s debt with the IRCJ’s support.
C2 has been appointed by the IRCJ to sponsor the rehabilitation of Fre’c. The proposed transaction will take the form of a demerger of Fre’c’s supermarket business of 27 stores and related assets into C2. In consideration C2 will assume net debt of approximately JPY 3.0 billion (GBP 16m). The process is expected to complete in August 2004 and will be funded from C2’s existing financial resources.
The proposed transaction is consistent with C2’s growth strategy in recent years, which has been driven by a combination of organic growth and selective acquisitions.
This is a small but strategic move. A successful deal would give C2 access to stores that complement the store size and location of its existing chain.
Introducing C2's processed and packaged foods supply chain will deliver better value for Fre'c's customers. At the same time, there will be opportunities for C2 to learn from Fre'c's successful fresh food operation.
Notes to Editors:
About C Two-Network Co. Ltd
Tesco acquired C2 for £139m net of cash in July 2003. C2 has a long history of distribution of processed foods to independent retailers. In 1994, it expanded on this experience and know-how and entered the Japanese food retail sector. It now controls 77 profitable stores mainly in the Tokyo metropolitan area. C2’s focus is on the retailing of packaged foods (grocery and refrigerated) through discount convenience stores with tenant fresh food operators.
About Fre’c
Fre’c (“Fresh and Cost”) is a regional privately owned Japanese company with particular strength in fresh food. In the year ending March 2003 sales were JPY 28bn (£146m). Fre’c operates 27 neighbourhood supermarkets mainly in dense residential locations.
About the Industrial Revitalisation Corporation of Japan (IRCJ)
The IRCJ is a Government affiliated body set up in mid-2003 to purchase non-performing loans of viable but indebted companies.
