The billionaire owner of Sports Direct and Newcastle United has made a £43m bet on Tesco's future.
The announcement was made by the retailer, which is majority-owned by Mike Ashley, to the stock exchange as the supermarket chain battles the fallout from a £250m profits error.
Tesco's admission, on Monday, sent its shares to their lowest level in a decade and raised serious questions on management and governance.
Sports Direct said it had entered into a put-option agreement with Goldman Sachs for more than 23 million shares, representing a 0.3% stake in the supermarket business.
Its statement read: "This investment reflects Sports Direct's growing relationship with Tesco and belief in Tesco's long-term future".
The move essentially means that Mike Ashley is betting that the Tesco share price will rise. The agreement gives Goldman Sachs the option to sell 23m Tesco shares to Sports Direct at a set price on an agreed future date.
If shares have fallen below this predetermined price, Goldman Sachs would be able to 'exercise' the option, allowing them to sell the shares to Sports Direct at the higher rate - meaning the retailer would have to pay more for the stock.
However, should the share price rise above the pre-agreed price, Sports Direct would be able to book the premium as profit.
Its punt on a recovery in the supermarket chain's value followed a decision by Tesco's third-largest shareholder to cut its stake.
The world's biggest investment firm BlackRock sold more than £150m-worth of shares, taking its stake below 5%.
The sell-off came to light after credit ratings agency Standard & Poor's joined Moody's and Fitch in warning of a potential downgrade to Tesco's credit rating.
It said its action would depend on the findings of the chain's investigation.
It has also emerged that Tesco executives may be hauled before MPs to explain its profit guidance mistake.
Adrian Bailey, the chairman of Parliament's Business, Innovation and Skills Committee, told BBC Radio 5 Live it was "unbelievable" that a company of Tesco's size could get into such a mess.
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