Tesco paves way for Dunnhumby sale with end to exclusive Kroger deal

Lynsey Barber
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Tesco's Clubcard creator just got a step closer to the chopping board (Source: Getty)

Tesco has taken a major step forward in paving the way for a sale of its lucrative Dunnhumby data business after agreeing a deal with US retailer Kroger to loosen an existing partnership which prevented the firm from expanding stateside.

The joint venture with Kroger had been a thorny sticking point in any potential sale of the billion-pound data business as the partnership prevents Dunnhumby from working with other retailers in the US

Now, Tesco has renegotiated its contract, ending the exclusive deal which leaves Dunnhumby free to work with other companies.

The company behind the Tesco Clubcard loyalty scheme has been held back from growing in the US market as a result of the partnership which began in 2003. It meant Tesco was for some time prevented from introducing a loyalty card to its now-shuttered US business Fresh & Easy, having to eventually work with Dunnhumby in the UK.

Dunnhumby and Cincinnati-based Kroger will still work together, with the US chain licensing analytics tools and services as well as taking over some of the firm's US assets, including 500 staff, to form its own loyalty card business.

Other assets and the financial terms of the deal were not disclosed.

"Under the new agreements, Dunnhumby's proven insight products and data expertise will now be deployed to capture the substantial, previously unavailable potential the North American market represents. Dunnhumby will be free to work with new retail and FMCG clients and to develop its existing strong platform of client relationships in the US and globally," said Dunnhumby chief Simon Hay.

Dunnhumby has further partnerships with huge brands such as Coca-Cola, Procter & Gamble and Home Depot.

Tesco, which last week reported the worst year in its near century-long history, said it was exploring strategic options for the business at the beginning of the year which could be worth up to £2bn.

WPP boss Martin Sorrell has taken an interest in the business which would sit well with the ad firm's recent acquisitions and plans for growth in data and digital.

A host of private equity firms have also been vying for a slice of the business, which is likely to be a majority stake as Tesco tries to hang on to a well-performing part of the company.

In an update from Tesco boss Dave Lewis to shareholders last week following the dire results, he said the review of options for Dunnhumby was "well-advanced".

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