Walmart in talks to sell majority stake in Asda

Walmart is in talks to sell a majority stake in Asda, the UK’s third-largest supermarket chain.

The US retailer said it was talking to a “small number of interested parties” about a possible investment in Asda. It is understood to be looking to retain a minority stake in the business, two decades after it moved into the British market by acquiring the grocer.

The move comes after UK regulators blocked Walmart’s plan to merge Asda with Sainsbury’s last April, arguing that it threatened to push up prices and reduce quality and choice for consumers.

Merging Britain’s second- and third-largest supermarkets would have created a business bigger than Tesco, with annual sales of £51bn.

Walmart said: “Following inbound interest Walmart and Asda can confirm that we are currently considering whether there is an opportunity for a third party to invest in Asda, alongside Walmart, in order to support and accelerate the delivery of Asda’s strategy and position Asda for long-term success.”

However, Walmart cautioned that “no decisions have been made” and said a stock market flotation remained an alternative option.

It said: “Walmart firmly believes that an IPO [initial public offering] is an attractive long-term objective for Asda. Asda is a great business with a clear strategy for the future and Walmart is committed to ensuring it has the resources and support it needs to deliver that strategy.

“Walmart has a clear international strategy around ‘strong local businesses, powered by Walmart’ – which involves a number of different ownership arrangements depending on the needs of its different markets.”

Last May, Judith McKenna, the chief executive of Walmart’s international businesses, told Asda staff that Walmart was “seriously considering” a stock market flotation for Asda. This was likely to value the supermarket chain at more than £7bn. Asda’s chief executive, Roger Burnley, said in July last year that a flotation could happen in two years.

Walmart bought the Yorkshire-based company in 1999. Asda’s first supermarkets were opened in the 1960s after the merger of two companies, the Asquith family’s business and Associated Dairies & Farm Stores.

Asda, which has more than 600 stores and controls about 15% of the UK’s grocery market, has been losing share to the German discounters Aldi and Lidl.

Walmart has revamped its international business in recent years by scaling back its operations in countries such as Brazil and targeting higher-growth markets such as China and India.

Source: The Guardian