WATCH: Asda returns to British ownership
Walmart (WMT) has agreed to sell UK supermarket chain Asda for £6.8bn ($8.7bn), bringing to an end two decades of ownership of the Northern chain.
Walmart confirmed on Friday it would sell a majority stake in Asda to billionaire petrol station entrepreneurs the Issa brothers and British private equity firm TDR Capital. Walmart will retain a stake in the business.
Judith McKenna, president and chief executive of Walmart International, said the deal would add “a new entrepreneurial flair, not only to Asda, but also to UK retailing.”
The Issa brothers, Mohsin and Zuber, are the founders and owners of EG Group, a Blackburn-based chain of petrol stations and fast food retailers. The pair are worth a combined £5bn and emerged as frontrunners to take control of Asda earlier this week.
“We are very proud to be investing in Asda, an iconic British business that we have admired for many years,” the brothers said in a statement.
“Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on.”
UK chancellor Rishi Sunak hailed the deal as "great" on Twitter and wished the Issa brothers "the best of luck."
Founded in 1949 in Leeds, Asda is Britain’s third biggest supermarket and makes annual sales of £22bn.
Asda’s sales grew by 3.8% between April and June this year, fuelled by a boom in online orders.
The buying consortium pledged to invest £1bn in the business over the next three years to accelerate its growth. Asda’s leadership will remain unchanged and the company will continue to be headquartered in Leeds.
Moshin and Zuber Issa said recent trading during the pandemic had shown “the fundamental strength and resilience of the business.”
Roger Burnley, Asda chief executive, said: “This new ownership opens an exciting new chapter in Asda’s long heritage of delivering great value for UK shoppers.
“With our combined investment, expertise and ambition, Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues.”
Walmart bought Asda for £6.7bn in 1999, marking the US giant’s second foray into Europe.
In recent years, Asda has struggled to compete with German discounters Aldi and Lidl. It suffered three years of falling sales in the middle of the 2010s. The poor performance prompted Walmart to seek a buyer for the business.
Walmart was poised to sell Asda to Sainsbury’s (SBRY.L) for £7bn last year but the deal was blocked by the UK’s competition watchdog. Walmart revived the hunt for a buyer earlier this year.
“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,” McKenna said.
The deal is subject to regulatory approval and is expected to close in the first half of 2021.