Google in pact with Permira to bid for Tesco’s Clubcard
19 Jun 2015
Google is mulling joining hands with UK private equity firm Permira to launch a bid for the Tesco-owned business that runs Tesco's loyalty card Clubcard.
The US technology firm was said to be among 10 companies mulling a bid for Tesco unit Dunnhumby next month.
The companies, culled from among 40 suitors, would be sent detailed information on Dunnhumby in the next fortnight. First round bids would be filed by the end of July, with the company thought to be worth as much as £2 billion.
Tesco was spinning off Dunnhumby as part of its bid to raise up to £5 billion to strengthen its balance sheet, after its profits fell sharply and a £263 million accounting scandal hit last year.
Tesco made a £6.4 billion annual loss last year – the biggest ever recorded by a UK retailer – amid a supermarket price war prompted by the rise of discounter supermarkets, such as Aldi and Lidl.
The retailer was also considering a sale of its Korean chain Homeplus, said to be worth £4 billion, and had already offloaded its Blinkbox film and music streaming businesses.
Dunnhumby gathers and analyses data from 1 billion shoppers around the world each year, and from the content of a shopper's cart could tell if a shopper was single, a fast-food junkie or a family juggling a tight budget with school-age children.
The retailer appointed Goldman Sachs to explore strategic options for Dunnhumby after announcing a plan to cut costs and sell assets in January.
Advertising group WPP Plc was also said to be interested in the company.
Last year, Google invested $40 million in Permira-owned start-up Renaissance Learning.
Tesco had also been considering a sale of its South Korean unit as it battled debt, an accounting scandal, and competition from Aldi Inc and Lidl.
In 2001, Tesco first acquired a 53-per cent stake in Dunnhumby, started by husband-wife team, University of Sheffield-trained mathematician Clive Humby and his wife Edwina Dunn, for £30 million. It raised its to 84 per cent in 2006, before buying the rest of the company.