Tesco, Britain's biggest retailer, said today it would buy 36 discount stores from South Korea's E-Land for $1.9 billion in its biggest single acquisition.
The purchase price, which includes existing debt, equates to £958 million sterling.
Tesco, like global rivals Wal-Mart Stores and France's Carrefour, is seeking to further expand in fast-growing international markets to offset slowing growth at home. South Korea is Tesco's second most profitable market after Britain.
The deal allows Tesco's South Korean discount store business, the second-largest in the country, to beef up in size and challenge the top-ranked E-Mart chain, run by Shinsegae.
Shares of rival South Korean retailers dropped sharply in anticipation of the deal, which will intensify competition.
"We've been pursuing this for two years, it is a terrific strategic opportunity for us to be equal number one in the market," Andrew Higginson, Tesco finance and strategy director, said in London.
Mr Higginson said this was the biggest acquisition yet undertaken by Tesco, but it did not necessarily mark a change in Tesco's acquisition strategy.
"There are very few deals of this size available. We are always in the market, in markets where we are successful, we are always looking for new stores," he said.
Tesco dominates British retailing with some 2,000 stores and more than one-third of the grocery market share.
The stores being acquired are all hypermarkets with a combination of food and non-food products. E-Land, which built its business as a fashion retailer, bought 32 outlets from France's Carrefour in 2006 for $1.85 billion.
Tesco shares dipped 0.7 percent in a flat London market.
Shares in Shinsegae, which also operates department stores in South Korea, dropped 6.9 per cent in a flat market Another Korean rival, Lotte Shopping, lost 2.9 per cent.
E-Land was selling the outlet business due to financial burdens and labour conflicts, analysts said.