Gas Station Billionaires In Running to Buy Asda From Walmart

Walmart Inc. has picked a consortium backed by TDR Capital as the preferred bidder for a majority stake in its U.K. grocery unit Asda, people with knowledge of the matter said.

The investor group beat out rival private equity firm Apollo Global Management Inc. and is now negotiating details of a deal with Walmart, the people said, asking not to be identified because the information is private. TDR has partnered with the Issa brothers, the British billionaires behind gas station owner EG Group, according to the people.

A value of more than 6.5 billion pounds ($8.4 billion) is being discussed, the people said. No final agreements have been reached, and talks could still fall apart, the people said.

Representatives for Apollo, Asda, TDR, Walmart and the Issa brothers declined to comment. Sky News’s Mark Kleinman tweeted Monday that TDR and the Issa brothers had emerged as the preferred bidder, which would return Asda to U.K.-based ownership if the deal is completed.

Walmart, the world’s biggest retailer, has been seeking to offload Asda for at least two years and saw a 7.3 billion-pound sale to J Sainsbury Plc blocked by antitrust regulators in 2019. Walmart revived talks on a sale of the grocer in July after shelving the plans earlier in the year due to the coronavirus pandemic.

Sales Jump

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

Asda’s comparable sales, excluding fuel, jumped 3.8% in the three months through June. It generated record online revenue during the quarter, with online grocery sales doubling and orders for in-store pickup quadrupling. The company increased its online capacity by 65% since March to 700,000 weekly order slots and plans to boost that further to 1 million slots next year, it said in an August statement.

Earlier this month, Asda said it would start offering a new Asda On the Move convenience store at three EG Group fuel stations in the Midlands. EG Group is backed by TDR, having been formed in 2016 by a merger of European Forecourt Retail Group and Euro Garages.

Pay Dispute

Any buyer of Asda will have to contend with the fallout from a discrimination case being brought by more than 15,000 mostly female store workers at the grocer. The group contends that they should be paid the same as workers in the company’s warehouses, who are predominantly men. The U.K. Supreme Court is scrutinizing the case.

Asda has said its hourly wages are the same for male and female staff and that disparities only arise because the work done in warehouses is different. If Asda loses, it may have to pay out a hefty sum in liabilities.

The case has been winding its way through the courts since 2014, when about 1,000 workers first brought the claims to an employment tribunal. Its result could set a precedent for similar lawsuits against other U.K. supermarkets.

©2020 Bloomberg L.P.

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