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‘Asda may float’
Posted on Wednesday, 15 May 2019 08:32
UK supermarket operator Asda could be about to go public following the collapse of a planned merger with domestic peer Sainsbury’s.

Reuters picked up on comments made by Judith McKenna, chief executive of parent company Walmart International, at an event for Asda managers yesterday, in which she said a flotation is being seriously considered as an option.

However, she cautioned that a listing is not imminent, saying the firm is not rushing into anything and the preparations for such a move would take years to carry out.

McKenna stated that an initial public offering (IPO) would strengthen the company’s long-term success.

Asda and Sainsbury’s unveiled plans to join forces via a GBP 7.30 billion merger in April of last year.

Following the announcement, reports suggested that both parties might need to offload some of their locations in order for the deal to pass muster with the Competition and Markets Authority (CMA).

However, on 25th April, the regulator blocked the proposed combination, saying it would be likely to result in an increase in prices for customers in stores, online and at petrol stations.

The CMA also ruled that potential reductions in the quality of products, the range available and the overall shopping experience were also factors behind its decision.

As a consequence, both Sainsbury’s and Asda mutually agreed to terminate the transaction, although the former’s chief executive, Mike Coupe, said the specific reason for the deal was to lower prices for customers.

Zephyr, the M&A database published by Bureau van Dijk, shows there have already been three IPOs announced by supermarket and other grocery store operators worldwide since the beginning of 2019.

Only one of these has a disclosed value as China-headquartered Jiangxi Guoguang Commercial Chains unveiled plans to float on the Shanghai Stock Exchange on 12th April.

The others in the sector to have announced listings this year are Iran-based Ofogh Koorosh Chain Stores and Hubei Zhongcheng Inspection.

© Zephus Ltd