International digital bank Barclays has announced that it has entered into an agreement to acquire Tesco's retail banking business for €700 million.
Under the terms of the agreement, Tesco will receive €600 million from Barclays and a further €100 million in net cash after settlement of all costs associated with the transaction.
The companies have also agreed to a long-term partnership that will see Barclays take over the management of Tesco Bank's credit cards, loans, and savings accounts. They have also agreed to sell banking services under the Tesco brand.
Barclays said that Tesco's retail banking client base is similar to its own, so it will build on its existing strategic partnerships in the UK with other leading retail, consumer electronics, and loyalty brands.
Following regulatory approval of the deal, expected in the second half of 2024, 2,800 Tesco employees will join Barclays.
"The strategic relationship with the UK's largest retailer will help create new distribution channels for our unsecured lending and deposit businesses. We will be able to bring our partner card expertise from decades of experience in the US to further enhance the highly successful Tesco Clubcard loyalty scheme," said K.S. Venkatakrishnan, Group Chief Executive Officer of Barclays.
"This partnership with Tesco is further confirmation of our continued investment in our UK consumer business. We look forward to working closely with the Tesco team over the coming months to ensure a smooth transition and, subject to completion of the transaction, to welcoming Tesco Bank colleagues and clients to Barclays," he added.
Ken Murphy, Chief Executive of Tesco, confirmed the agreement and said, "The deal will significantly reduce our financial commitments, which in turn will strengthen our balance sheet and allow us to focus on the continued growth of our core retail business."
At the same time, Tesco emphasized that the majority of the proceeds from the deal will be returned to shareholders.
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