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Google joins race for Tesco's Dunnhumby

Tesco Clubcard

Google along with private equity firm Permira, are poised to bid for Dunnhumby, the company behind Tesco’s Clubcard.

A deal would mark the latest step in the advance of Google, which has been criticised for intruding into every area of life.

Dunnhumby, which was bought by Tesco in 2004, gathers and analyses data from almost 1billion shoppers around the world and helped Tesco create its Clubcard loyalty scheme.

Tesco is selling a stake in the operation as part of its plan to raise cash in a bid to turn the business around after a string of profit warnings and the discovery of a multi-million-pound blackhole in its accounts.

The Dunnhumby business is valued at between £800million and £2billion and bankers will call for first-round bids in the next few weeks. Internet giant Google is understood to be interested in Dunnhumby’s data analysis and the know-how behind its customer loyalty programmes.

Tesco (up 1.45p at 209.5p) has not decided how it will sell the business or whether it will retain a stake and is inviting offers before making a decision.

Other groups in the running, according to Sky News, include Sir Martin Sorrell’s media giant WPP with General Atlantic Partners, Apax Partners with former Tesco, Dixons and Apple executive John Browett.

Dunnhumby’s clients include Coca-Cola, Unilever and Nestlé. It recently renegotiated a deal with US retailer Kroger to loosen an existing partnership which prevented the data firm from expanding in America and working with other businesses.

Tesco is also in talks with a number of private equity firms to sell its £6billion South Korean empire.

US firms KKR and Carlyle, and London-based CVC Capital Partners have been asked to bid for the Homeplus business of the struggling supermarket.

Under chief executive Dave Lewis, who joined last year from Procter & Gamble, Tesco has been reviewing its sprawling business empire to sell unwanted parts and concentrate on improving its core UK business. Lewis wants to cut debt and fund his turnaround plan.

He has already sold loss-making video-streaming business Blinkbox.

Source: This is Money 

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19 June 2015

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