Walmart, the US retail behemoth, is in talks to sell its UK subsidiary Asda to rival Sainsbury’s. The two companies are in advanced discussions about a deal that would see Walmart offload a business it has owned for 20 years, people familiar with the matter said.
The move comes as Walmart looks to focus on its core US market and compete with Amazon, which has been eating into its sales.
Selling Asda would also help Sainsbury’s to cut costs and compete more effectively with the likes of Tesco and German discounters Aldi and Lidl.
The two companies are understood to be discussing a deal that would see Sainsbury’s take over Asda’s 570 stores and create a supermarket giant with more than 2,800 outlets and annual sales of around £50bn.
The talks are at an early stage and there is no guarantee that a deal will be agreed, but the two sides are said to be keen to do a deal.
Walmart bought Asda for £6.7bn in 1999 and has since invested billions of pounds in the business. But it has been struggling to compete with Amazon in the US and has been looking at options for Asda for some time.
Selling the business would also help Walmart reduce its debt, which stands at $21bn.
The move comes as the UK’s grocery market is undergoing a major shake-up. Tesco is in the process of buying wholesaler Booker, while Amazon bought upmarket grocer Whole Foods last year.
Sainsbury’s is Britain’s second-largest supermarket chain with around 1,400 stores, while Asda is third with 570 outlets. A tie-up would create a giant with more than 2,800 stores and annual sales of around £50bn.
It is not clear what would happen to Asda’s head office in Leeds if a deal went ahead, but it is likely that some jobs would be lost as Sainsbury’s looks to cut costs.
Does Walmart want to sell Asda?
It seems that they might be ready to do so, in order to focus on their core US market and compete with Amazon.
A sale would also help Walmart reduce their debt significantly. However, nothing is certain yet as the talks are still in early stages.
