By Bria Hampson
This month could see a buyout announcement for Asda. Lone Star and Apollo Global Management have both submitted private equity bids for the supermarket giant. After the planned merger with Sainsbury’s collapsed in early 2019, Walmart, Asda’s current US owner, began to plan for the sale of a stake.
Under the new deal, it is understood that Walmart will no longer hold the majority stake, but will retain a smaller percentage. Asda was previously valued at around £7billion during the merger talks with Sainsbury’s and it is believed that the current bids are around £6.5 billion.
Lone Star and Apollo Global Management are both assisted by big names in retail. Rob Templeman (working with Apollo) was the former chief executive of Debenhams and currently chairs RAC, having previously chaired Gala Coral. Whereas, Paul Mason (for Lone Star) was the former Asda chief executive and has previously led Matalan, Dr. Martens, and New Look. It would not be a surprise if either take the role as Asda’s chairman.
Asda currently holds 15% of the UK’s grocery market share and is currently set to expand its delivery capacity by 40%. With online sales currently at an all-time high as a result of COVID-19, this expansion is set to keep Asda as a firm favourite but may impact costs with Asda already being overtaken by both Aldi and Lidl as the cheapest supermarket.
It is hard to predict how or if the buyout will affect Asda, but it is certain that both groups are intent on floating the supermarket in the long- term and maintain the competitive prices offered.