Official: Tesco Scraps dunnhumby Sale Plans

UK supermarket Tesco has decided to abandon the sale of its customer data business dunnhumby, after its price tag dropped from an initial £2bn to around £700m.

dunnhumby runs Tesco's Clubcard loyalty programme, which tracks customers' shopping habits to build profiles and target them with relevant offers. In 2001, Tesco bought a 53% stake in dunnhumby for £30m, and it increased its stake to 84% in 2006, before buying out the rest of the shares. The firm currently employs around 2,000 staff located in 54 offices in 29 countries.

The sale was to have been part of Tesco's attempt to pay off some of its adjusted net debt following last year's accounting scandal. Among those originally rumoured to be interested in bidding were dunnhumby founders Edwina Dunn and Clive Humby; venture capital firm TPG; Nielsen; former Tesco executive and Dixons boss John Browett; Google, and marcoms giant WPP.

However, the initial price tag of around £2bn was said to have dropped by more than half, and a number of bidders reportedly pulled out of the race after Tesco announced that whoever bought dunnhumby would have to negotiate a new contract with the supermarket group within five years. More than half dunnhumby's current revenue comes from the deal with its parent. The value of the business was also affected by the restructuring of the 50-50 joint venture relationship Tesco previously had with US supermarket Kroger, which will ultimately lead to the removal of dunnhumby's access to the US firm's data.

After announcing its first-half financial results earlier, Tesco said in a statement that it has decided to retain dunnhumby following a 'comprehensive strategic review'. The troubled supermarket giant, which is currently £21.9bn in debt, today posted a 55% drop in operating profits to £354m for the first six months of the year, although the business did show a pre-tax profit of £74m from a loss the previous year. On a call to reporters, CEO Dave Lewis said: 'I won't sell assets below what I think they're worth. We think there is an awful lot more that we can do to generate cash from our core operations'.

Web site: www.dunnhumby.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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