The divestment decision is part of a plan by Tesco CEO Dave Lewis to focus on the sales of its supermarket business.
Financial details of the transaction have not been divulged by both the companies.
A Tesco spokesperson was quoted by BBC as saying: “We know how important a great bakery offer is to our customers, and this agreement will mean we can continue to serve shoppers with great quality Tesco bakery products.”
Earlier this year. the UK supermarket chain divested Dobbies Garden Centres, restaurant chain Giraffe and Harris + Hoole coffee shops.
While Soho Coffee will acquire Euphorium's high street stores and Islington factory, Leicestershire-based Samworth Brothers will buy the Weybridge plant.
The Euphorium bakeries within Tesco outlets will continue to be operated and managed by the supermarket chain.