Walmart restarts talks on potential sale of Asda
LONDON: Walmart Inc has revived talks on a potential sale of its UK grocery unit Asda, after the potential multibillion-dollar deal was put on hold earlier this year amid the coronavirus pandemic.
“The world’s biggest retailer and Asda are in discussions with a small number of suitors interested in acquiring a stake in the British business after renewed inbound interest,’’ the two companies said in an e-mailed response to Bloomberg queries on Monday.
“We believe now is the right time to explore options for a third party to invest in our business to accelerate the long-term delivery of our value strategy, both in stores and online,” the they said. “There’s no certainty the latest discussions will lead to a transaction.’’
Deal activity is starting to pick up after a lacklustre first half, as financing markets improve and investors seek to deploy capital.
“KKR & Co is in talks about a potential acquisition of Elsan that could value the French clinic chain at about $4 billion,’’ people familiar with the matter said last week.
“eBay Inc is separately nearing an agreement to sell its classified advertising business to Norwegian online marketplace Adevinta ASA for about $9 billion,’’ Bloomberg News reported on Monday.
Asda could fetch a valuation similar to what rival supermarket chain J Sainsbury Plc offered in 2018, a person with knowledge of the matter said, asking not to be identified because the information is private.
UK antitrust authorities blocked the proposed £7.3 billion ($9.2 billion) deal last year, saying a combination of Sainsbury and Asda would lead to higher prices for shoppers.
A representative for Walmart and Asda declined to comment on the valuation.
Private equity firms Apollo Global Management Inc, Lone Star Funds and TDR Capital each submitted firstround offers for Asda earlier this year and were invited to join the next round of bidding, Bloomberg News reported in March.
Weeks later, Walmart put the planned sale of a majority stake on hold to focus management’s attention on running the business amid unprecedented spikes in demand from consumers stockpiling for the Covid19 lockdown.
Groceries supplying essential food products are among the few retail outlets that have remained open throughout the UK government’s coronavirus lockdown. While the start of the pandemic saw a huge boost in supermarket sales, the safety measures needed to operate safely have meant that costs rose as well.
In its latest quarterly update, Asda said comparable sales jumped 3.5% in the three months through March. Demand levels were so high it was receiving 3,500 visits a minute to its website in the week starting March 18, according to the company.
Grocery spending in Great Britain jumped 13.7% for the 12 weeks through June 14, according to the latest figures from market research firm Kantar.
Asda increased its sales 6.3% from a year earlier and was the third-largest grocery chain by market share during the period, the data show.