Walmart in talks about selling stake in Asda | Progresiv
Walmart revealed that it is in talks regarding the sale of a stake in its Asda subsidiary, although a stock market flotation remains the US retailer’s preferred option. 
Responding to earlier reports that it had received approaches from private equity firms, the companies issued a statement saying: “Following inbound interest, Walmart and Asda can confirm that we are currently considering whether there is an opportunity for a third party to invest in Asda, alongside Walmart, in order to support and accelerate the delivery of Asda’s strategy and position Asda for long term success.”
They stated that discussions with a small number of interested parties were underway, but stressed that no decisions had been made. The statement added that Walmart “firmly believes” an initial public offering (IPO) “remains an attractive long-term objective” for Asda.
After last year failing to offload Asda via a merger with Sainsbury’s, the head of Walmart’s international division Judith McKenna revealed that it was considering a stock market listing for the business. Analysts see an IPO as the most likely route as private equity hasn’t historically been that interested in food retail given its low returns.
However, while the identity of the potential suitors was not revealed, most reports suggested that private equity firms are the most likely candidates. Last year it emerged that KKR – which has been recently linked to a possible buyout of Walgreens Boots Alliance – was considering a move for Asda. One of the private equity firms key advisers is Tony de Nunzio, a former CEO of the supermarket group.
After Asda revealed disappointing final quarter results, analysts speculated that Walmart may want to dispose of its underperforming asset sooner rather than later. Posting its financial results for the same period, Walmart partly blamed Asda’s performance for dragging on the group’s international business.
Whilst the challenges in the UK remain, Walmart has its own obstacles to overcome in its domestic market where it is facing ever-increasing competition from Amazon in both the grocery and general merchandise sectors. It is also looking to expand in fast-growing markets such as China and India. (www.kamcity.com)
