Tesco Everyday Value baked beans are stacked on a shelf at a Tesco shop in Bishop's Stortford, southern England.
Tesco Everyday Value baked beans are stacked on a shelf at a Tesco shop in Bishop's Stortford, southern England.

UK retail giant Tesco is in exclusive talks to merge with China Resources Enterprise (CRE). The move is aimed at reshaping its international business structure and form a "leading multi-format retailer in China".

The joint-venture could combine 131 Tesco stories in China and about 3,000 CRE outlets. CRE will hold 80% of the stakes and the proposed deal is expected to create a business with sales of some £10bn ($15.5bn, €11.6bn).

"The intended partnership would bring together the Company's deep understanding of local customers, established nationwide infrastructure and proven track record as a partner with Tesco's global retail expertise, international sourcing scale and supply chain capabilities," CRE said in a statement.

However, neither party has made any guarantee of the merger.

Britain's biggest retailer was trading 0.64% higher at 1.44 pm BST in London.

In a stock market statement, Tesco said the partnership is "consistent with Tesco's stated strategy of focusing on profitable routes to growth in fast-growing but less mature markets, with a disciplined approach to the allocation of capital".

Tesco opened its first store in China in 2004. In 2011, Tesco, the second largest retailer, announced plans to expand business presence in the world's second largest economy.

The Chinese market has been a particular target for retailers in recent times, with the world's biggest retailer, Wal-Mart, reportedly planning a bid for Hong Kong supermarket unit ParknShop. Wal-Mart said they were planning to expand business interests in Asian emerging markets.

In April this year, Tesco posted a bigger-than-expected fall in full year profits - a first in 20 years.

Earlier this month, it was reported Tesco axed 50 senior executives from head offices. The move came as chief executive Philip Clarke begins plans to revive business for UK's largest retailer.

Tesco has also announced plans to exit loss-making business in the US, where it operates under the Fresh & Easy brand.