Tesco will pay out £40m to ease its exit from Japan.

The supermarket is handing half the shares in its Japanese business to the country’s second-largest retailer, Aeon Corp, in the first part of a two-stage exit process. Tesco will then pump a further £40m into the joint venture to finance further restructuring.

After that, Tesco would have “no further financial exposure” to the Japanese business or its operations, the supermarket giant said.

“We are very pleased to announce this deal with Aeon today, and are confident that this will deliver the best outcome for our staff, for our customers in Japan and for our shareholders,” said Tesco CEO, Philip Clarke.