THE biggest shake up in the history of the Irish retailing industry is expected to be announced shortly, with the British supermarket giant Tesco buying the Quinnsworth, Crazy Prices and Stewarts operations in the Republic and Northern Ireland.
Tesco is expected to pay the owner, Associated British Foods, more than £600 million for the stores, which are market leaders on both sides of the Border.
The deal, which will be the biggest takeover in the Irish grocery trade, may be confirmed as early as today.
The takeover will give Tesco a 26 per cent share of the grocery market in the Republic and 30 per cent in Northern Ireland. In the Republic there are 57 Quinnsworth stores, 21 Crazy Prices and 31 Penneys department stores.
In the North, ABE has 23 Stewarts stores, 10 Crazy Prices and five Primark drapery stores. The stores employ about 7,500 in the Republic and a further 5,500 in Northern Ireland.
It is understood the Tesco takeover of the ABE retailing interests will be followed within a matter of weeks by a major investment in the Wellworths supermarket chain in Northern Ireland by the British group Safeway.
Safeway will reportedly pay around £100 million for a half stake in Wellworths, which has an estimated 20 per cent share of the market in the North. Wellworths is currently wholly owned by Fitzwilton, the investment company in which Dr Tony O'Reilly and his family have a substantial stake.
Despite substantially lower profitability in Irish supermarkets compared to Britain, analysts believe Tesco will pay in excess of £600 million for the dominant position in both the Republic and Northern Ireland that the acquisition of the ABF retailing interests would brings.
Last year, the combined ABE retailing operations in the Republic and the North had sales of around £1.5 billion and operating profits of £69 million. Stock market analysts believe that sales in 1997 will be more than £1.6 billion, with operating profits topping £75 million.
Rumours of the Tesco plans swept through the Irish retail trade yesterday, but none of the parties involved would comment Industry sources said that staff of Quinnsworth, Crazy Prices and Stewarts will be told this morning of the plans to sell to Tesco.
The same sources said the existing store names would probably be kept for a year, before being renamed under the Tesco banner.
If Tesco does buy the ABF interests, industry sources believe, it is unlikely to retain the drapery interests, Penneys and Primark, but instead sell these possibly to a management buyout group.
But, given the move into the Irish department store market by big British retailers such as Debenhams, industry sources said there should be no shortage of buyers.
Sources in the retail industry said that the arrival of a supermarket giant such as Tesco could have major implications for the industry, especially for Irish suppliers and distributors who are accustomed to dealing with a comparatively small group such as Quinnsworth/Stewarts/Crazy Prices.
Tesco is likely to impose demands on suppliers in terms of price and deliveries that they have not been accustomed to.
The expected return by Tesco to the Irish market will come just 10 years after the British company withdrew from the Irish market after accumulated losses of around £20 million.
On that occasion, Tesco is thought to have got the Irish market totally wring and according to one source tried to sell Tetley teabags to people who buy Lyons Tea".