Walmart, the world’s largest retailer, is selling its UK business, Asda, to rival Sainsbury’s for $10 billion. The move comes as Walmart looks to focus on its core US market and compete with Amazon.
Asda is the third-largest supermarket chain in the UK with a market share of about 16 percent. The deal will see Sainsbury’s become the UK’s largest supermarket chain with a market share of about 28 percent.
The deal is subject to regulatory approval and is expected to complete in late 2019 or early 2020. Walmart will retain a 42 percent stake in the combined business and will have two seats on the board.
The deal is a win for both companies. Sainsbury’s will be able to better compete with Tesco and Amazon, while Walmart can focus on its core US market.
Why are Walmart selling Asda?
There are a few reasons why Walmart might be selling Asda. Firstly, Walmart has been looking to focus on its core US market in recent years. This has seen it make a number of divestments, including the sale of its Brazilian business earlier this year. Secondly, the competitive landscape in the UK grocery market is tough.
Tesco is the clear market leader, followed by Sainsbury’s, Asda (owned by Walmart), and then Morrisons. With Amazon also now entering the fray with its purchase of Whole Foods, it was getting increasingly difficult for Asda to compete. Finally, Walmart may have simply decided that it was time to exit the UK market after nearly 20 years. It had been rumored for some time that Walmart was looking to sell Asda and this may have just been the right time to do so.
