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‘Walmart may list Asda or sell to a PE firm’
Posted on Thursday, 25 April 2019 13:05
Walmart may look into options for wholly-owned subsidiary Asda now the Competition and Markets Authority (CMA) has blocked the proposed GBP 7.30 billion merger with J Sainsbury on the grounds shoppers and motorists would be worse off. News that the regulator has put a stop to the proposal announced this time last year has sparked speculation the US grocery-to-discount department store operator could consider an initial public offering (IPO) or a sale to a private equity firm. Walmart has certainly made no such indication it would pursue a review in its statement today in response to the final report published by the CMA. Judith McKenna said in the press release Asda merely saw the proposed deal with Sainsbury’s as an opportunity to strengthen its business. She added Walmart will ensure the subsidiary will have the resources needed to continue positioning itself as a strong UK retailer. The comments have not stopped the speculation though; Reuters noted that analysts believe the US owner may instead weigh up either an IPO or a sale to a buyout house. A senior supermarket director told the news provider neither option would be a good one as a listing would involve trying to market growth prospects to prospective investors. On the other hand, he said: “The problem with the idea of private equity is that the only way PE [private equity] makes money is to have its own exit and there isn’t one because you can’t break-up Asda now”. Bloomberg has suggested Sainsbury’s could bide its time; if Walmart does sell the subsidiary to a buyout player, the backer will want to exit, possibly within five years at the earliest. The retail environment may have significantly changed at this point meaning the concerns raised by the CMA may no longer have a bearing and the two UK supermarkets could try once again to combine. © Zephus Ltd