US private equity giant leads race to buy Asda

US private equity giant Apollo is in position to snap up Asda after its rival Lone Star backed out of the race at the 11th hour. The two firms were vying for a majority stake in Britain’s third-largest supermarket from US retail giant Walmart.

Lone Star’s bid for Asda was not high enough for Walmart, sources told The Telegraph. The two private equity groups were seen as the frontrunners after Walmart put the Asda stake back on the market. A decision is expected within days.

It is thought Apollo and Lone Star had both valued Asda at around £6.5bn, less than Walmart paid for the Leeds-based grocer in 1999.

They had also put retail heavyweights on their teams to help put together their bids, with former Debenhams boss Rob Templeman working with Apollo and ex-Asda boss Paul Mason with Lone Star.

Walmart was forced to put Asda back up for auction after a £14bn merger with Sainsbury’s was blocked by the Competition and Markets Authority in April. The pair are not allowed to consider another merger for a decade.

Regulators said the tie-up would have made consumers worse off. Walmart had considered spinning Asda off and floating it on the stock market. Asda is the only one of Britain’s top four supermarkets – Tesco, Sainsbury’s and Morrisons – not listed on the London Stock Exchange.

If Apollo wins, it has been reported that its bid includes reviewing each of Asda’s 600 stores, rather than immediately firing the starting gun on mass closures and job losses.

It is not clear if other groups, such as UK-based TDR Capital, are in the running. Lone Star was contacted for comment yesterday.