Walmart announced on Monday that it has agreed to sell its British supermarket chain Asda to rival Sainsbury’s, in a deal that would create Britain’s largest grocery group and potentially help the U.S. retailer fend off Amazon.com Inc.
The all-share transaction values Asda at about £7.3 billion ($10 billion), based on Sainsbury’s closing stock price on Friday. Under the terms of the deal, Walmart will own 42 percent of the combined company, with Sainsbury’s shareholders owning the rest.
The deal is subject to approval by shareholders and regulators, and is expected to close in the second half of 2019.
If successful, the merger would surpass Tesco Plc as Britain’s biggest grocery chain by market share, with 31.4 percent compared with Tesco’s 27.6 percent, according to Kantar Worldpanel data for the 12 weeks ended March 11.
Sainsbury’s and Asda, which are both part of Walmart’s international portfolio, have been struggling to compete with Tesco and German discounters Aldi and Lidl, which have been eating into market share.
The two companies said they expected to generate £500 million in cost synergies within three years of the deal completing, by sharing back-office functions such as human resources and IT, as well as procuring goods together.
Is Walmart selling Asda? Yes , Walmart has agreed to sell its British supermarket chain Asda to rival Sainsbury’s. The all-share transaction values Asda at about £7.
