Walmart revives talks to sell a stake in UK’s Asda

Walmart, the world’s biggest retailer, has revived talks to sell a stake in its UK supermarket chain Asda, having paused the process in April at the peak of the coronavirus disruption.

The US group said in a statement on Monday that it was in talks with “a small number of third-party investors” to take an interest in the grocer, “following renewed inbound interest”.

It added: “There is no certainty that a transaction will happen and we will not be providing any further comments on these discussions.”

Walmart has also been considering a float of Leeds-based Asda, which has more than 600 stores, after UK competition authorities last year blocked a proposed tie-up with local rival J Sainsbury.

While Walmart put the sale talks on hold for the pandemic, it remained keen to reduce its exposure to the highly competitive UK market and focus on faster-growing markets such as China and India.

The company did not identify Asda’s suitors. Private equity firms including KKR have considered making a move for the chain. One of KKR’s advisers, Tony De Nunzio, previously ran the UK company.

Asda, which Walmart bought in 1999, is the third-largest supermarket in the UK, with £23bn of annual sales. However, it is a small contributor to Walmart, which produced $524bn in total revenues last year. Asda, run by Roger Burnley, has had to reduce prices and invest in new ranges to stay competitive.

The revived sale talks come at a time of investor interest in grocers, which have emerged as corporate winners in the pandemic. Unlike clothing chains and other discretionary retailers, authorities allowed grocers to stay open through lockdown to allow customers to buy food and other essential items.

While Asda said there had been a fall-off in demand for non-essential items, and it had closed 33 of its homewares and clothing stores in March, Britons’ rush to stockpile had compensated for the decline, according to its most recent results. Like-for-like sales, excluding petrol, rose 3.5 per cent in the three months to the end of March.

The supermarket chain, which has a large presence in the north of England and Scotland, also said there had been a surge in demand for home shopping. Asda.com had more than 3,500 visits per minute in late March. The company also hired 22,000 workers temporarily.