TESCO aims to open between ten and 20 stores a year in Japan after it unveiled plans to buy a Tokyo-based convenience store chain for £139 million .

The UK’s largest supermarket has made a cash offer for CTwo-Network, a 78-store food retailer and wholesaler. The deal is likely to be finalised next month after the Japanese retailer’s board and senior managers, who own 41 per cent of the group’s share capital, agreed to accept the offer.

David Reid, deputy chairman, said that the acquisition would help Tesco to boost its overseas businesses.

The company already has stores in Thailand, South Korea, Taiwan and Malaysia.

Mr Reid added that the strategy in Japan would be relatively inexpensive compared with its plans to open new hypermarkets in South Korea.

“We have not gone for a big company or an expensive start-up. We have gone for a company which has a good business model with an excellent business,” he said.

C Two-Network has a turnover of just £286 million, a fraction of Japan’s £60 billion grocery market. The company achieved a profit of £21 million last year and Mr Reid said that the acquisition would enhance Tesco’s earnings this year.

Tesco hopes to open stores of between 1,000 sq ft and 10,000 sq ft using C Two-Network’s existing retail brands and management team. Mr Reid said: “We have no plans to immediately start looking for hypermarkets but there is a lot of opportunity to grow this business.”

Mr Reid admitted that Tesco was entering the Japanese market during a low point in that country’s retail economy. However, he said: “In good times assets like this are extremely expensive.”

Analysts said that Tesco was using the acquisition as a relatively low-risk way of investigating the lucrative Japanese market, in which it first expressed an interest four years ago.

Andrew Fowler, of Merrill Lynch, said Tesco had expanded to nine overseas markets and needed to ensure that it was making returns on its investments. He said: “This is a good deal in itself but the question is, does Tesco really need to be in Japan?”