China Resources Enterprise has reportedly signed a memorandum of understanding with the British retail giant Tesco.
Based on the MOU, the two parties expressed interest in establishing a joint venture to operate hypermarkets, supermarkets, convenience stores, cash and carry outlets, and liquor store businesses in mainland China, Hong Kong, and Macau. China Resources Enterprise will hold a 80% stake in the JV, while Tesco will hold the remaining 20%.
The founding of the JV will involve the integration of the businesses of China Resources Enterprise and Tesco. At present, China Resources Enterprise operates 2,986 stores in mainland China and Hong Kong, while Tesco has 131 stores as well as shopping center business in China.
The MOU does not constitute any legally binding commitment; however, it is an exclusive rights provision indicating that the two parties will implement further discussion about the detailed items of the JV establishment.