Walmart sells majority stake in Asda
Buyout firm TDR and the entrepreneurial Issa brothers plan to invest more than 1 billion pounds during the next three years to grow Asda’s UK suppliers and drive more online sales
6 October 2020 | 0
The 1999 acquisition of Asda by Walmart was billed as an event set to shake up the UK supermarket business due to the American giant’s deep pockets. However the acquisition never quite lived up to these high expectations, with Asda facing increasing competition from Aldi and Lidl.
On Friday, Walmart sold its majority stake in Asda to buyout firm TDR Capital and the Issa brothers, who made their fortune in gas stations.
According to Walmart, the deal will result in forging the “right ownership structure for Asda, whilst bringing a new entrepreneurial flair” to UK. retailing.
However, Clive Black, a retail analyst at Shore Capital, expressed uncertainty about this verdict.
“The deal raises more questions than answers,” he said. “Whether or not the raw entrepreneurship and ambition of the Issas is enough to drive greater same-store sales and cash flows per square foot on a sustained basis remains to be seen.”
TDR alongside brothers Mohsin and Zuber Isaa plan to invest more than 1 billion pounds during the next three years to grow Asda’s UK suppliers and drive more online sales.
Asda’s management team, led by chief executive officer Roger Burnley, will remain, while Walmart will retain a minority stake and one board seat and continue to supply the stores, Bloomberg reports.
Valuing Asda at 6.8 billion pounds, the transaction represents the second attempt at a sale by Walmart, after the UK’s antitrust regulators blocked a merger with competitor Sainsbury last year.
Look out for October issue, where journalist Dan White will analyse the latest developments at Asda and their implications for the wider market.