Walmart in discussions to sell stake in Asda

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Walmart says it may sell a majority stake in Asda, its UK supermarket, after “inbound interest” in the idea.

The US retail giant said it was talking to a “small number of interested parties” about a possible investment.

It comes after UK regulators blocked Walmart’s plan to merge Asda with Sainsbury’s last year on fears it would raise prices for consumers.

Walmart said it would be likely to retain a stake in Asda if the plan moved forward.

“No decisions have been made and we will not be commenting further on these discussions,” it said.

“If or when we decide to pursue this opportunity further, our first priority will be to share more detailed information with our colleagues.”

Walmart purchased Yorkshire-based Asda in 1999. The company is among the top three supermarkets in the UK, with an estimated 15% of the market.

However, in recent years, it has seen increased competition from low-priced German competitors such as Aldi and Lidl.

‘Clear strategy’

After regulators blocked the Sainsbury merger, Walmart said it was considering a stock market flotation for Asda.

On Wednesday, the firm said that remained “an attractive long-term objective”.

“Asda is a great business with a clear strategy for the future and Walmart is committed to ensuring it has the resources and support it needs to deliver that strategy,” Walmart said in a statement.

Walmart has overhauled its international strategy in recent years, scaling back its business in countries such as Brazil while partnering with local firms in markets where it sees growth.

In 2018, it took a majority stake in India’s online retailer, Flipkart. It also has partnerships with China’s and Japan’s Rakuten.

“Walmart has a clear international strategy around ‘strong local businesses, powered by Walmart’ – which involves a number of different ownership arrangements, depending on the needs of its different markets,” the company said.

A potential third-party investment in Asda would be intended to “support and accelerate the delivery of Asda’s strategy and position Asda for long-term success”, it said.

John Colley, associate dean of Warwick Business School, said: “Having pinned all their hopes on a merger with Sainsbury’s, bosses at Asda have struggled to find a Plan B for the business.

“The company is clearly not wanted by Walmart, which is occupied with greater challenges such as the threat of Amazon.”

He said a flotation had “always seemed improbable”, but the idea suggested that Walmart had been “struggling to find potential buyers at a price it found appealing”.

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