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US private equity giant to approach Tesco in £2 billion Club Card deal

US private equity giant TPG is eyeing up the marketing services subsiduary behind Tesco’s Clubcard loyalty scheme, Sky News reports.

One of the world’s biggest buyout firms approached Tesco several months ago about acquiring Dunnhumby, a wholly owned subsidiary that bankers say is worth well over £2 billion.

Tesco is understood to be examining its continued ownership of Dunnhumby as part of a broader review of its business being led by Dave Lewis, its new chief executive.

The review was already under way prior to Tesco’s shock accounting discrepency announced last month in which it had identified a £250 million overstatement of its half year profits.

The crisis at Tesco resulted in the suspension of four executives including the company’s UK managing director, triggering investigations by the Financial Conduct Authority and Financial Reporting Council.

The results of a probe ordered by Mr Lewis could also lead to a further inquiry by the Serious Fraud Office.

TPG’s enquiry about a purchase of Dunnhumby came while Mr Lewis’s predecessor, Philip Clarke, was still running Tesco prior to his ousting in July, according to a source.

While it is understood that the supermarket giant rejected that initial approach, with no formal talks having taken place, insiders said that TPG remained interested in the business.

Other private equity firms and big marketing services holding companies are also expected to join the bidding if a formal auction gets underway.

Some bankers believe that Dunnhumby, which is one of the world’s leading providers of analysis of consumer behaviour, could be worth up between £2-3 billion.

Earlier this year, Dunnhumby bought Sociomantic Labs, an advertising technology firm, for a price reported to be in the region of $200 million.

TPG has a long track record of investing in retail business and supporting industries with past holdings including stakes in Debenhams, the department store chain, and Victoria Plumb, the bathroom products retailer.

Tesco and TPG declined to comment on Monday.

This was posted in Bdaily's Members' News section by Ellen Forster .