Tesco's Carrefour Deal Should Add €50bn in Sales

Strategic alliance will give UK supermarket enhanced buying power as it faces up to the challenge posed by the Sainsbury's-Asda merger

Ioannis Pontikis 2 July, 2018 | 2:56PM
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Tesco has done a deal with Carrefour

Tesco (TSCO) shares rose today as it announced a strategic purchasing alliance with French supermarket giant Carrefour (CA) on own-brand products and goods not for resale. Morningstar equity analysts view this imminent partnership as a net positive for both constituent parties due to mutually beneficial purchasing efficiencies, with Carrefour benefiting the most in our opinion from Tesco's market-leading expertise and rich own-brand experience. We maintain our fair-value estimates of 230p and €17.9 fair value estimates for Tesco and Carrefour.

For Tesco, we think the deal comes as a response to the Sainsbury's-Asda proposed merger, which gives the merged entity unprecedented buying power with a combined market share of 31.4% versus 27.6% for Tesco, according to Kantar data.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Carrefour16.81 EUR0.00Rating
Tesco PLC230.00 GBP0.00Rating

About Author

Ioannis Pontikis  is an Equity Analyst for Morningstar

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