UK-based retail giant Tesco Plc has signed an agreement with Trent Ltd to form an equal joint venture by picking up 50 per cent equity stake in hypermarket retail firm Trent Hypermarket Ltd (THL), which is a wholly-owned subsidiary of Trent and operates under the Star Bazaar brand, for around Rs 850 crore ($140 million).

As per the definitive agreement signed by the two parties, Tesco Overseas Investments (Tesco Overseas), a wholly-owned subsidiary of Tesco, will acquire part of the equity shares held by Trent Ltd in THL for about Rs 150 crore and would separately subscribe to additional THL shares for around Rs 700 crore, the company said in the filing with the stock exchanges.

With this, Tesco would become the first foreign retailer to mark its foray into India's multi-brand industry after the government liberalised norms in the sector.

The government allowed up to 51 per cent foreign direct investment (FDI) in multi-brand retailing in September 2012.

The two companies had said in December 2013 that they have sought regulatory approval from the Foreign Investment Promotion Board (FIPB), the nodal authority for clearing foreign investments in the country, to form the JV wherein they would hold equal stake.

At present, THL operates 16 stores across the southern and western regions of India. The proposed partnership will operate and build on the existing portfolio of Star Bazaar stores in Maharashtra and Karnataka.

Established in 1998 as part of the Tata Group, Trent presently operates Westside, a fast growing chain of retail stores. The company has 74 Westside departmental stores.

Trent ventured into the hypermarket business in 2004 with Star Bazaar. This store offers customers an array of products that include staple foods, beverages, health and beauty products, vegetables, fruits, dairy products, consumer electronics and household items. Star Bazaar also includes a large range of fashionable in-house garments for men, women and children. Trent also owns majority stake in Landmark, a books and music retail chain.

(Edited by Joby Puthuparampil Johnson)

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