Tesco, the UK's leading supermarket group, is well known to have major international aspirations, with extensive operations in central and Eastern Europe and the Far East as well as in its home market.
Japan is one country the company has been investigating for the last few years, and today it has finally announced plans to enter the market with the acquisition of local convenience store operator C Two-Network.
The deal, which values the Japanese chain at £139 million (€196m), will see Tesco take complete control of C Two-Network's 78 stores and its wholesaling activities. C Two-Network operates mainly in the Tokyo metropolitan area under the Tsurukame, Tsurukame Land, Foodlet and Kamechuru fascias.
Tesco will offer a price of ¥3,400 (€24.6) per share, a premium of 35 per cent over the average daily close of the past three months. The deal is conditional upon Tesco receiving at least 66.7 per cent of C Two-Network's shares, but the UK group said that its intention was to take 100 per cent control of the company.
Tesco said that the two companies shared a similar management approach, corporate culture and retailing vision, and that the Japanese stores would continue to be run by the current management team, with the support and guidance of the Tesco Group.
Sir Terry Leahy, Tesco's chief executive, said: "The acquisition of C Two-Network is the next step in our international strategy for long term growth. We first signalled that we would be researching Japan in 2000.
"C Two-Network is a profitable value retailer with good stores in good locations, run by a young management team. It is a great success in Japan and will provide Tesco with an excellent opportunity to enter a large and unconsolidated market with potential for growth.
"We are confident that by combining Tesco's retailing capability and the strength and local knowledge of the C Two-Network team we can grow the business further."
Mr Inaida, CEO of C Two-Network, added: "C Two-Network reported record earnings for the fiscal year ending March 2003; this was achieved by providing a strong customer offer through good management and innovation. We are confident that Tesco's skills will assist us in our plans to accelerate the growth of the C Two-Network business and further improve our operating performance."
The deal will allow Tesco to gain a greater understanding of Japanese customers and suppliers - vital if the group is to extend its presence there further, as seems likely given its track record in other countries.
Tesco is already a major player in the food retail markets in Thailand, South Korea, Taiwan and Malaysia.