Walmart confirms Asda sale to billionaire UK brothers in £6.8bn deal
Asda is back in British ownership after Walmart today agreed a sale to the Blackburn-based Issa brothers in a £6.8bn deal.
Under the new ownership structure, the billionaire petrol station tycoons Mohsin and Zuber Issa, backed by private equity firm TDR Capital, will acquire a majority ownership stake in Asda.
Walmart will retain an equity investment in the supermarket giant.
The US retail giant was forced to put Asda up for sale after merger talks with Sainbsury’s were blocked by the competition regulator last year.
The Competition and Markets Authority warned that the merger, which would have created Britain’s largest supermarket by market share, would be expected to result in a “substantial lessening of competition”.
Moody’s vice president and senior credit officer Charlie O’Shea viewed the the deal favourably.
“It will allow Walmart to continue to refocus its international efforts on markets with more long-term upside, such as India and China,” O’Shea said.
Race for ownership
Walmart had been expected to select buyout firm Apollo Global Management, which had been working on an offer with former Debenhams boss Rob Templeman.
Earlier this week Walmart selected the consortium led by the Blackburn brothers as the preferred bidder for Asda.
Private equity firm Lone Star Funds, which had been working with ex-Asda executive Paul Mason, pulled out of the race last week.
Asda will continue to be led by chief executive Roger Burnley who will form part of the board alongside representatives appointed by the Issa brothers, TDR Capital and Walmart.
“This new ownership opens an exciting new chapter in Asda’s long heritage of delivering great value for UK shoppers”, Burnley said.
“With our combined investment, expertise and ambition; Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues.”
Fresh investment
The grocer’s new owners have committed to an investment of £1bn over the next three years “to further strengthen the business and its supply chain”.
The Issa Brothers said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on.”
The transaction is subject to regulatory approvals and is expected to be complete in the first half of next year.