Walmart Restarts Talks on Potential Sale of U.K. Grocer Asda

(Bloomberg) -- Walmart Inc. said it has revived talks on a potential sale of its U.K. grocery unit Asda, after the potential multibillion-dollar deal was put on hold earlier this year amid the coronavirus pandemic.

The world’s biggest retailer and Asda are in discussions with a “small number” of suitors interested in acquiring a stake in the British business after renewed inbound interest, they said Monday in an emailed response to Bloomberg queries.

“We believe now is the right time to explore options for a third party to invest in our business to accelerate the long-term delivery of our value strategy, both in stores and online,” the two companies said in the statement. There’s no certainty the latest discussions will lead to a transaction, they said.

Deal activity is starting to pick up after a lackluster first half, as financing markets improve and investors seek to deploy capital. KKR & Co. is in talks about a potential acquisition of Elsan that could value the French clinic chain at about $4 billion, people familiar with the matter said last week. EBay Inc. is separately nearing an agreement to sell its classified advertising business to Norwegian online marketplace Adevinta ASA for about $9 billion, Bloomberg News reported Monday.

Asda could fetch a valuation similar to what rival supermarket chain J Sainsbury Plc offered in 2018, a person with knowledge of the matter said, asking not to be identified because the information is private. U.K. antitrust authorities blocked the proposed 7.3 billion-pound ($9.2 billion) deal last year, saying a combination of Sainsbury and Asda would lead to higher prices for shoppers.

A representative for Walmart and Asda declined to comment on the valuation.

Buyout Interest

Private equity firms Apollo Global Management Inc., Lone Star Funds and TDR Capital each submitted first-round offers for Asda earlier this year and were invited to join the next round of bidding, Bloomberg News reported in March. Weeks later, Walmart put the planned sale of a majority stake on hold to focus management’s attention on running the business amid unprecedented spikes in demand from consumers stockpiling for the Covid-19 lockdown.

Groceries supplying essential food products are among the few retail outlets that have remained open throughout the U.K. government’s coronavirus lockdown. While the start of the pandemic saw a huge boost in supermarket sales, the safety measures needed to operate safely have meant that costs rose as well.

In its latest quarterly update, Asda said comparable sales jumped 3.5% in the three months through March. Demand levels were so high it was receiving 3,500 visits a minute to its website in the week starting March 18, according to Asda.

Grocery spending in Great Britain jumped 13.7% for the 12 weeks through June 14, according to the latest figures from market research firm Kantar. Asda increased its sales 6.3% from a year earlier and was the third-largest grocery chain by market share during the period, the data show.

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