Tesco has announced plans to sell its Czech Republic and Slovakia businesses to Ahold Delhaize for approximately £1.5bn on a cash and debt-free transaction.

The sale includes the entire store estate and offices in the Czech Republic and Slovakia as well as distribution centres in Kralupy, Presov and Beckov.

Hungary is excluded from the transaction and will continue to be fully owned and managed by Tesco, and the company plans to review all options for the future of Hungary.

The move aims to streamline operations and allow Tesco to increase its focus on the main UK and Irish businesses.

Ahold Delhaize is a global food retail group with a wide portfolio of 17 brands and has a presence across Europe, the US and Indonesia.

According to the business, The Czech Republic and Slovakia produced combined sales of £2.9bn and a majority of the £115m adjusted operating profit reported for the Central European region for the prior 52-week period.

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Ken Murphy, CEO of Tesco, said: “It has been a privilege to serve customers and invest in colleagues, stores and the supply chain in the Czech Republic and Slovakia, and we are proud of what has been achieved over the past 30 years. I am delighted that Ahold Delhaize intends to invest in both markets.

“For Tesco, the transaction will further simplify the group, increasing our focus on our core UK and Irish businesses and supporting our continued investment in our food-first retail ecosystem and the capabilities that will drive future growth, while enabling a further return of capital to shareholders.”

The businesses in The Czech Republic and Slovakia will remain part of Tesco until the transaction is completed next year.

This comes after the supermarket retailer recently reported strong first half results for the 26 weeks to 29 August.

Profit rose by 6.5 per cent to £1.78bn for the 26 weeks to 29 August, while group sales excluding VAT and fuel increased 2 per cent to £33.8bn.