Advertising giant WPP lines up Tesco Club Card bid
WPP, the world's largest advertising and marketing agency, has teamed up with private-equity firm General Atlantic to bid for Dunnhumby, the business that developed Tesco's Clubcard loyalty program, according to people familiar with the matter.
The two firms are among those that submitted offers last week for the business, which tracks customer purchases and then sells the information to companies, said the people, who asked not to be identified because the information is private. Other bidders include Advent International and Warburg Pincus, the people said. Permira Advisers, which may team up with Google, also bid, they said.
Tesco hired Goldman Sachs to explore options for Dunnhumby, including a possible sale, in January. The original £2bn (€2.8bn) price tag has since been lowered to closer to £1bn due to concerns that once the operation is no longer part of Tesco it will be less attractive to clients such as Coca Cola Co, the people said.
Tesco shares fell 0.2pc at 8:55 am in London yesterday, while WPP rose 1.1pc.
In April American supermarket chain Kroger agreed to acquire Dunnhumby USA's data-mining technology and more than 500 of its staff. Tesco's loss of those sales could also reduce the price for Dunnhumby, a source said.
Tesco, the UK's biggest supermarket company, is selling assets and shutting stores to cut costs and reduce £21.7bn pounds of debt. The grocer may retain a minority stake in Dunnhumby as part of any deal, two of the people said.
Spokesmen for Tesco, WPP, General Atlantic, Permira, Google and Warburg Pincus declined to comment. A representative for Advent did not respond to a request for comment.