Tesco PLC (LSE:TSCO) has confirmed it will hand £700 million back to shareholders following the completion of the sale of its banking and Clubcard operation to Barclays PLC (LSE:BARC)
The deal, originally announced in February, involves a ten-year Tesco-branded white-label partnership for financial products supplied by Barclays.
Tesco is retaining all the existing insurance and money services activities, including ATMs, travel money and gift cards.
The £700m will be returned to shareholders via an incremental share buyback, the supermarket giant added, which amounts to the full cash proceeds and the additional net cash after transaction costs.
This buyback is expected to start after completion of the final tranche a £1bn buyback programme currently underway.
Barclays added that the deal will add £300 million to profit in the fourth quarter of 2024 generating 50 basis points (0.5%) benefit to return on assets. The transaction has been financed from Barclays' existing cash resources, it added.
Ken Murphy, Tesco's chief executive, added: “Through our strategic partnership, customers will have access to new and innovative propositions while continuing to enjoy the unique benefits of Tesco Clubcard.
Vim Maru, Chief Executive of Barclays UK, commented: "Today marks a significant step as we continue to grow Barclays UK. We will bring the strength of both businesses together, benefitting customers and colleagues.
“I am excited that the combination of our brands, alongside the benefits of Clubcard and its loyalty scheme, will support millions of households across the UK with their financial needs."