B&M shares rise on Asda takeover talk

Shares in B&M rose sharply in early trading yesterday following weekend reports that supermarket giant Asda is mulling a £4.4 billion takeover of the discount retailer.

B&M shares were up nearly 5% to 357p in morning trading yesterday.

The chain is owned by the billionaire Arora brothers, who have built B&M up to a 500-plus store retail giant since taking control of the firm in 2004.

Acquiring the retailer would give Asda access to a network of high street shops through which to distribute its products, including the George clothing range.

Clive Black, analyst at Shore Capital, said: “B&M would bring great capability in general merchandise value retailing for Asda, with its strong range, authority, pricing and space growth, while providing George, Asda’s excellent apparel brand, the scope for space growth in largely complementary locations. B&M is also increasingly effective in grocery, we should add.

“Cost synergies would be potentially evident in central overheads, sourcing and logistics.”

A deal would also release pressure on Asda’s core supermarket business, which has seen years of sales declines as competitors have stolen a march on it.

Tesco is in discussion over a merger with Booker, while Sainsbury’s is believed to have Nisa in its sights.

Discount chain B&M is reportedly on Asda’s radar.