Barclays to buy retail banking arm of supermarket chain Tesco for GBP600 million

By Steve Goldstein

Tesco on Friday said it was selling the retailing banking business of Tesco Bank to Barclays for GBP600 million initially, and then another GBP100 million after the settlement of certain regulatory capital amounts and after transaction costs.

The U.K. supermarket chain said it will use majority of a combined GBP1 billion, which also includes a special dividend previously announced from Tesco Bank, for a share buyback.

It will retain insurance, ATMs, travel money and gift cards, that on a proforma basis account for roughly GBP80 million to GBP100 million in operating profit, and said the deal is mildly accretive to earnings per share.

Barclays said it's acquiring credit cards, unsecured personal loans, deposits and the operating infrastructure that includes GBP8.3 billion of unsecured lending balances with a credit quality consistent with its existing U.K. portfolios. The business it's buying had an adjusted operating profit of approximately GBP85 million in the 12 months ended February 2023.

Barclays also will enter into an exclusive strategic partnership with Tesco for an initial period of 10 years to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, paying GBP50 million per year.

Tesco (UK:TSCO) shares have dropped 3% this year while Barclays (UK:BARC) shares have declined by 7%.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-09-24 0233ET

Copyright (c) 2024 Dow Jones & Company, Inc.