Walmart is to sell its UK supermarket chain Asda to a consortium comprising private equity group TDR Capital and the founders of petrol station operator EG Group. The purchase price is £6.8 billion ($8.8 billion).
This is much less than the £10 billion that the proposed merger with Sainsbury's was worth several years ago and only marginally more than Walmart originally paid 21 years ago, although Walmart is retaining an equity stake in the retailer. But it’s more than the £6.5 billion that had been suggested for the sale in recent weeks.
The deal sees TDR and Mohsin and Zuber Issa, the billionaire brothers who built a fortune from EG Group, is tasked with transforming the fortunes of one of the UK's big four supermarket operators, one that has struggled in recent periods.
While Asda is a major fashion retailer via its George at Asda range (and was a pioneer in supermarket fashion) it has suffered as other supermarkets have ramped up their fashion offers and as German discounters, Aldi and Lidl have also entered the fray.
The Issa/TDR deal means it will be the first time that Asda has been owned by a UK-based entity since Walmart acquired it for £6.7 billion back in 1999.
As mentioned, Walmart is retaining an Asda stake and reports said it will have a continuing commercial relationship with the firm and a seat on the board. Current CEO Roger Burnley will also stay in charge.
There had been concerns that some private equity groups were more interested in Asda for its freehold properties than for the chance to run a major retailer. But the new owner is to invest more than £1 billion in the chain over the next three years to protect is supply chains and keep prices low.