Private Equity May Be Coming for Walmart’s Asda

(Bloomberg) -- Private equity firms may soon start circling Walmart Inc.’s Asda after U.K. regulators placed a possibly insurmountable hurdle in the way of its planned 7.3 billion-pound ($9.5 billion) takeover by J Sainsbury Plc.

The world’s largest retailer is eager to leave behind the U.K.’s sluggish supermarket ambiance and expand in faster-growing markets like China and India, where it’s committed to its largest deal ever to secure a stake in online seller Flipkart Group. Now that the U.K. Competition and Markets Authority said Asda’s and Sainsbury’s plan to sell stores didn’t assuage antitrust objections, the U.S. retailer may seek a buyer elsewhere.

“We assume a private equity bid for Asda to emerge swiftly,” Jefferies analyst James Grzinic wrote in a note to clients, adding that share prices would soon come to reflect “the strong likelihood of the merger not happening.”

Apax Partners LLP, CVC Capital Partners and Carlyle Group looked at another U.K. supermarket chain, Wm Morrison Supermarkets Plc, four years ago, people familiar with the companies said at the time -- suggesting they may be in the hunt.

A private equity scenario, like the planned Asda-Sainsbury tieup, would also reduce competition in the U.K. and benefit other industry players’ market valuations, according to James Anstead and colleagues at Barclays.

Private Equity May Be Coming for Walmart’s Asda

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