Walmart Completes Asda Sale to TDR Capital, Issa Brothers

Walmart has completed its sale of Asda Group Ltd. to private equity firm TDR Capital and the gas station billionaire brothers Zuber and Mohsin Issa. 

On Tuesday, Walmart said that the parties had satisfied the terms of the 6.8-billion-pound deal, and that they have progressed on regulatory approvals and await approval from the U.K.’s Competition and Markets Authority, the government department that reviews competition issues in mergers. 

The parties said they expect to receive the CMA’s approval in the second quarter. 

“Walmart Inc., Asda Group Limited, the Issa brothers and TDR Capital have today announced that the Issa brothers, founders and co-CEOs of EG Group, a global convenience and forecourts retailer, headquartered in Blackburn, U.K., and investment funds managed by TDR Capital LLP, a leading U.K.-based private equity firm, have completed the acquisition of Asda, Walmart’s wholly owned U.K. business, for an enterprise value of 6.8 billion pounds, on a debt-free and cash-free basis,” the parties said in a statement. 

Walmart first disclosed the deal in October, saying at the time that “the new owners will continue to build a strong and successful business, benefiting from fresh capital and expertise, as well as valuable links with the world’s largest retailer.” 

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Walmart has said it will stay connected to the business with a minority stake, and have a seat on the board. 

The deal is generally seen as part of an overall strategy adopted by Walmart in recent years to evaluate its overseas presence, and focus on growth markets while also ramping up its investments in financial services offerings and fine-tuning its e-commerce operations to compete with Amazon. 

“In the U.S. market, where [Walmart] originally came from, Amazon is growing really fast,” said Ken Hung, a professor at Suffolk University Boston who focuses on areas including supply chain and operations improvement. 

“So, perhaps, one of the reasons for this is also to kind of pull back and regroup and release some cash so that Walmart can one, invest in one of its priorities right now, on fintech, and, two, try to allocate its resources so that it can compete better with Amazon in the domestic market,” he added. 

“Internationally, [it is] to reassess which is a growing market, and which is not,” he said. 

Asda was seen as a bold move when Walmart acquired the food retailer in 1999, taking it into one of Europe’s most competitive markets. While initially successful — and spawning a rush to supercenters by fellow British retailers — in recent years Asda has faced intense pressure from lower-priced operators such as Lidl and Aldi, while chains such as Tesco, Sainsbury’s and Waitrose have also upped their game.

In November, Walmart also disclosed plans to sell its Argentina business to Grupo de Narváez. In December, Walmart chief executive officer Doug McMillon said at the Morgan Stanley Virtual Global Consumer & Retail Conference that the company was assessing its overseas strategy with an eye on growth markets, including India, where it is making a significant push in e-commerce in an attempt to beat off rival Amazon. 

“When I think about the opportunity that we’ve got during this window of Walmart’s history and what we’re trying to get done right now being in good businesses positioned well and having the culture and way of working for innovation and speed and productivity are kind of the two things that, I think, we’re working on,” he said at the time. “So I mean the opportunity that we have in India is enormous. Contrast that with the opportunity in Argentina. Yeah, it makes sense that we would spread our energy over a place that’s got tremendous upside.” 

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