Walmart’s U.K. chain stirs interest

News agency reports three firms made initial offers for Asda

Walmart Inc.’s U.K. grocery chain is taking bids from potential buyers, Bloomberg News reported Monday. Walmart has been looking to divest of Asda since a proposed sale to a rival chain fell through last year.

According to Bloomberg, three buyout firms submitted initial bids for Asda and were invited to join the next bidding round. Asda could be valued at more than $8.6 billion, the news agency said citing “people familiar with the matter.”

Representatives from the companies — Apollo Global Management Inc., Lone Star Funds and TDR Capital, which is reportedly teaming with its portfolio company ES Group — did not respond to Bloomberg inquiries.

Walmart declined to comment to both Bloomberg and the Arkansas Democrat-Gazette.

The Bentonville-based retailer reached a deal in 2018 to sell Asda to Sainsbury’s for what was then about $9.4 billion.

But in April 2019, regulators in Britain rejected the proposed sale, saying the merger would reduce supermarket competition. That would cause price increases, a lower quality and range of available products, and a poorer overall shopping experience, according to the Competition and Markets Authority.

Judith McKenna, chief executive officer of Walmart International, said after the deal’s collapse that, though disappointed with the regulatory agency’s decision, Walmart would continue to focus on positioning Asda as a strong U.K. retailer and “ensure Asda has the resources it needs to achieve that.”

Despite Walmart’s denials, though, rumors that the retailer was still seeking a buyer for Asda have persisted.

Various companies, including global investment firm KKR and British discounter B&M, were reported to be exploring bids for the company over the past year.

Walmart was also said to be considering an initial public stock offering for Asda after the Sainsbury’s merger was blocked.

Asda, which had 631 stores as of January, remains the third-leading grocery chain in Great Britain in terms of market share, behind Tesco and Sainsbury’s, according to Statista. After Morrisons at No. 4, however, German discount chains Aldi and Lidl continue to gain ground as U.K. shoppers tighten their belts amid post-Brexit uncertainty.

Sainsbury’s was the only one of the “big four” to see sales increase in the first quarter of 2020, according to research and consulting firm Kantar.

The supermarket chain saw sales rise 0.3% over the previous year. Asda sales fell 1.2% for the quarter, with Tesco down 0.8%. Morrisons saw sales fall 2%.

Walmart does not release revenue for its international markets.

In its fourth quarter earnings report, the retailer said its U.K. unit saw both net sales and same-store sales decline 1.3%. But according to Kantar, the retailer said, its online grocery sales continue to outpace the market.

Walmart acquired Asda in 1999 for about $10 billion, in what was its largest transaction until May 2018, when it bought a majority stake in Indian e-commerce firm Flipkart Group for $16 billion.