Asda eyes stock market flotation
Firm considers listing after merger blocked
SUPERMARKET chain Asda is eyeing a stock market flotation and price cuts as it tries to bounce back from its failed merger bid with Sainsbury’s.
Judith McKenna, international president of Asda’s owner, US food group Walmart, told the supermarket’s management team that it is “seriously considering” a listing to strengthen the chain’s “long-term success”. Although she stressed that preparations may “take years” it is understood that bankers have started gauging investor appetite.
The move comes only weeks after the Competition and Markets Authority blocked a potential £12billion merger with rival Sainsbury’s, claiming it would drive up prices.
Meanwhile, Roger Burnley, Asda chief executive, said the group would invest £80m to keep store prices down for the rest of the year.
“We need to focus on what will make a difference to customers,” he said. Other initiatives include testing same-day delivery of online groceries.
Analysts were sceptical of the flotation plans, suggesting that Walmart, which bought Asda for £6.7bn in 1999, was also keen on selling the supermarket to a private equity buyer. Shore Capital analyst Clive Black said: “No doubt a dual process may be under way. An IPO could be a tactic to tempt financial buyers too.”
John Colley, associate dean of Warwick Business School, added: “Bosses at Asda are struggling to find a Plan B. The fact that an IPO is being considered suggests private equity firms are not interested at a price that will appeal to Walmart.”
The GMB union called for a meeting with Walmart bosses to assess the implications. “It needs to remember they are playing with people’s lives while they try to make billions on the stock market,” said national officer Gary Carter.
Holiday firm Tui blamed Brexit and grounding of Boeing’s 737
Max aircraft after two fatal crashes for its £261million loss months for the six to March. It compares to a £148m loss last year, and the firm said summer bookings were down 3%.