Tesco, the FTSE 100 supermarket group, has agreed to sell its businesses in the Czech Republic and Slovakia to Ahold Delhaize in a deal valuing them at €1.7 billion (£1.5 billion).
The price is on a cash and debt free basis, and includes lease liabilities under accounting rule IFRS 16.
Excluding those, the value is €1.2 billion (£1.0 billion).
Tesco expects net cash proceeds of €1.2 billion (£1.0 billion) before tax and other transaction costs.
The sale is subject to antitrust and other regulatory approvals, and is expected to complete in the second half of 2027.
Tesco said it would return the majority of the net proceeds to shareholders through an incremental share buyback after completion.
It expects the deal to be broadly neutral to earnings per share and to its ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) once the buyback is complete.
Ahold Delhaize is a Dutch-Belgian food retail group with 17 local brands serving 77 million customers a week in the US, Europe and Indonesia.
The two businesses generated combined sales of £2.9 billion in the last financial year.
They also provided most of the £115 million adjusted operating profit reported for Tesco's Central European region.
The sale covers all stores and offices in both countries, plus distribution centres in Kralupy, Presov and Beckov.
Ken Murphy, Tesco's chief executive, said the deal would simplify the group and sharpen its focus on its core UK and Irish businesses.
He said this would support investment in what he called its "food-first retail ecosystem", while allowing a further return of capital to shareholders.
Murphy said Tesco was proud of what it had achieved over 30 years in the two countries.
Hungary
Tesco's Hungarian business is not part of the agreement and remains under its ownership.
The company said it would continue to review all options for the future of that business.
Since 2021, Tesco has also raised about £0.5 billion from selling non-core property in Central Europe, including a number of large shopping malls.
Goldman Sachs and Citi are advising Tesco on the deal.
