You are here
LONDON -- Sir Terry Leahy, chief executive of Tesco, told the Sunday Observer here that his company will not make a significant acquisition in the United States, instead eyeing expansion in China.
In The Observer, Leahy was quoted saying: "People have talked about businesses in the U.S. that could be bought, but I don't think they are right for us. We have had researchers in America, but I can tell you that we have no current plans to make an acquisition there."
Without explaining in detail why Tesco would steer clear of U.S. opportunities, the c.e.o. did brand the U.S. "a competitive market; it's a challenging place."
Tesco had been mentioned early on as an interested party in relation to Albertsons, the management of which made clear recently that no suitors had come up with a satisfactory deal.
Leahy confirmed that China is on Tesco's agenda. The chain last year said it would invest in a 50 per cent stake in China's Hymall chain. "We will have to scale up in China, it's such a big place that you either have to ease out or commit quite a bit," Leahy said. In partnership with Hymall, Tesco currently operates 50 Chinese hypermarkets, with its biggest presence in Shanghai. Now the plan is to extend into the south of the country and in Beijing, according to the report in the Observer.
About a fifth of Tesco's revenue comes from its overseas operations, in 12 countries spanning eastern Europe, and including Japan and Turkey.
His caution is likely to be welcomed in the City where investors view the US as a potential graveyard for British retailers. But Leahy is interested in moving into India once New Delhi opens up the sector to foreign investment.