Walmart is selling its United Kingdom grocery business Asda to a consortium of private investors in a deal that values the business at 6.8 billion pounds or $8.8 billion.
TDR Capital, a UK-based private equity firm, and UK entrepreneurs Mohsin and Zuber Issa have partnered to acquire a majority stake in Asda with Walmart retaining an equity investment in the company. In addition, the company will maintain a board seat and commercial relationship with Asda.
“We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing. I’m delighted that Walmart will retain a significant financial stake, a board seat, and will continue as a strategic partner. Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future. This important combination will continue to keep customers and colleagues at Asda’s heart, which is important to us all,”Judith McKenna, President and Chief Executive Officer of Walmart International, said in a statement.
This marks the first time in 21 years that Asda has been owned by a United Kingdom-based company. Asda was founded in 1949 and acquired by Walmart in 1999 in a $10.8 billion deal. Walmart wholly owned the company, which has 584 grocery stores, 18 standalone petrol filing stations and 33 Asda Living stores. Asda also had a substantial property portfolio and operates George, a UK clothing retailer, according to a Walmart news release.
Walmart previously attempted to unload Asda in 2018 to J. Sainsbury PLC in a 7.3 billion pound deal. However, this deal was clocked by the Competition and Markets Authority, the UK’s regulatory agency, on the grounds that the deal would likely raise consumer prices.
The new deal is still pending regulatory approval but the parties expect the transaction to be completed in 2021.
Asda will maintain its current leadership, headed by CEO Roger Burnley and remain headquartered in Leeds. The company is expected to invest 1 billion pounds over the course of the next three years in strengthening Asda’s business and supply chains, increasing the proportion of UK-based suppliers and the volume of products sourced from UK suppliers.