The Sunday Telegraph - Money & Business
Walmart to pick up Asda equal pay bill despite sale
If judges rule in workers’ favour then previous US owner, rather than Issa brothers, faces hefty costs
ASDA’S previous owner Walmart is expected to pick up the bill for a longrunning legal battle over equal pay if judges rule in the workers’ favour despite the grocer changing hands.
The supermarket chain was bought by the billionaire Issa brothers and private equity firm TDR for £6.8bn in October.
The new owners fended off competition from Apollo and Lone Star, two other private equity bidders, which were said to have dropped out of the race after failing to agree on the potential cost of the equal pay dispute.
Sources close to the transaction said there is an arrangement in place with Walmart for a level of indemnity that is “sufficiently large” to cover any back payments if the Supreme Court upholds previous rulings.
Walmart retains a minority stake in the retailer.
The case, the biggest-ever equal pay claim in the private sector in the UK, was brought by Asda’s mostly female checkout staff, who claim they have been discriminated against as the mostly male warehouse workers are on higher wages.
It has been thought that the Issas took on a chunk of the liability to clinch the £6.8bn deal.
The Blackburn-based brothers have raised £3.5bn in debt to pay for Asda. Loan and bond investors were told that the knock-on effect on the new owners would be minimal even if the justices rule in the employees’ favour.
A verdict by the court of appeal in 2019 found in favour of the 35,000 shop workers and said they could compare themselves to the depot workers.
Asda has since asked the UK’S highest court to overturn earlier rulings.
There was a virtual hearing in July last year, with some industry pundits expecting a verdict as early as next month. The workers are seeking six years of backdated pay from the retailer, from the date of their claim.
Asda could have to cough up hundreds of millions of pounds if it loses.
The outcome will have repercussions for thousands of staff at rival supermarkets including Tesco, Sainsbury’s, Co-op and Morrisons, who have also pursued equal pay disputes.
Leigh Day, which represents the employees, previously estimated the major grocers could be facing backdated pay claims totalling £8bn.
A spokesman for Walmart declined to comment.
The Issa brothers own EG Group, one of the world’s largest petrol station and convenience store operators.
The brothers built their empire from a single petrol station in the North of England. It now operates over 5,000 across all of Europe. The pair are merging Asda’s petrol stations with their forecourt empire in a £750m deal as part of their takeover of the supermarket.
Last week, they said they planned to raise a further £1.2bn to support this acquisition as well as another deal in Germany. They borrowed £3.5bn to support the broader transaction with Walmart this month.
Asda is in the process of axing up to 5,000 staff as part of a drive to simplify the management structure in stores and bolster its online offering. Bosses are also seeking to hire 4,500 staff to pick internet orders.
Sources said the decision is not related to its new owners, but is instead driven by changing shopping habits after customers embraced the internet when coronavirus struck.
Walmart originally bought Asda in 1999 for £6.7bn.