Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) has sold about 20% of its stake in Tesco PLC (LON:TSCO) (OTCMKTS:TSCDY), according to a regulatory filing. On October 16, Berkshire Hathaway sold derivatives representing 80 million of the voting rights in the world’s third largest retailer for 300 million pounds ($485 million). That brings down the Warren Buffett-led company’s stake in Tesco from 4.98% to 3.98%, according to The Telegraph.
Berkshire Hathaway disappointed with Tesco?
The stake sale comes a few weeks after the retail giant reported disappointing half-year results. The company is struggling to reverse its shrinking share in the domestic market. Profit from its European operations tanked 67%. The company has failed miserably in the world’s top three markets: USA, China and Japan. As its international operations failed, Tesco PLC (LON:TSCO) (OTCMKTS:TSCDY) faces stiff competition from J Stansbury, Wal-Mart Stores Inc. (NYSE:WMT)’s Asda and Aldi.
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During the first half of this year, Tesco’s same-store sales sank in all of its overseas markets. With its 1 billion pound turnaround plan, the company is adding staff, revamping its stores and product ranges. The company has slowly shifted its focus to smaller convenience stores and online business. Tesco PLC (LON:TSCO) (OTCMKTS:TSCDY) chief Philip Clarke said the company’s UK operations are gaining strength.
Tesco still a large foreign investment for Berkshire Hathaway
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) didn’t disclose the reason for slashing its stake in the retailer. Warren Buffett has been investing in Tesco PlC (LON:TSCO) (OTCMKTS:TSCDY) since 2006. Despite the recent stake sale, Tesco remains one of the largest investments of Berkshire Hathaway outside the United States. The stake sale took place on October 16, the same day Berkshire Hathaway’s Marmon Group announced the acquisition of British company IMI’s drink dispensing business for £690 million.
American shares of Tesco PLC (LON:TSCO) (OTCMKTS:TSCDY) were down 0.11% to $18.17. Class B shares of Berkshire Hathaway Inc (NYSE:BRK.A) (NYSE:BRK.B) rose 0.27% to $117.20 at 10:11 AM EDT.