Tesco is moving further into the Far East with the purchase of the failed Japanese food chain Fre’c.
The privately owned chain of 27 fresh food stores has outstanding debts of £53million and has been recently saved by the Industrial Revitalisation Corporation of Japan (IRCJ). Tesco will take on £16m of the chain’s debt as part of the sale agreement and debt restructure with IRCJ.
A spokesman from Tesco described the purchase as a “small but strategic move’ and a good fit with the C-Two Network of 77 Tokyo stores it purchased last year for £140m. The acquisition is in line with the retailer’s overall strategy of steady organic expansion. “To be purchasing a massive acquisition strategy wouldn’t be the best way forward…we prefer to learn slowly about the market, “ he said.
Fresh food is very important in Japan and produce is labelled with ‘picked by’ or ‘manufactured by’ dates instead of ‘sell by’ dates to ensure that food is as fresh as possible.
A city analyst commented on the sale: “All the fresh food in the C-Two stores is sold by local concessions, so acquiring Fre’c enables Tesco to learn about fresh food in Japan. It needs to get hands on experience if it’s going to be successful there.”
The Fre’c operations will be absorbed into C-Two Networks and will be financed using the company’s resources. The purchase will be finalised in August.
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