Sunday 1 March 2020 12:08 pm

Asda: Private equity firms race to buy majority stake

Private equity firms are vying to buy a majority stake in Asda after its US owner Walmart decided to offload the supermarket following the competition watchdog’s decision to block its merger with Sainsbury’s.

US buyout firm Lone Star has reportedly made an offer for a stake in the grocer, with private equity firms Apollo and TDR also in the running.

Read more: Walmart in talks to sell controlling stake in Asda

Lone Star is interested in Asda’s property portfolio, as the grocer owns 75 per cent of the freeholds to its supermarkets, the Sunday Times reported. 

It is unlikely that a sale to a private equity firm would attract a valuation as high as the £7.3bn price tag under the failed Sainsbury’s merger. 

TDR declined to comment. City A.M. has contacted Lone Star and Apollo for a response.

Last week Walmart confirmed it was in early-stage talks about selling a controlling stake in the UK supermarket after receiving “inbound interest” from a small number of firms. 

A person close to the talks said the interested parties were private equity firms, but on Wednesday said the discussions were “informal”. 

“Together, we are in discussions with a small number of interested parties who share Walmart and Asda’s commitment and passion to growing the business,” Walmart and Asda said in a joint statement.

“No decisions have been made and we will not be commenting further on these discussions.”

Read more: Asda sales slump due to ‘cautious’ Christmas shoppers

They said Walmart would maintain a significant minority stake in any deal. 

Walmart last year said it was weighing up listing Asda on the stock market. The US retail giant last week said it “firmly believes that an initial public offering is an attractive long-term objective for Asda. Asda is a great business with a clear strategy for the future”.

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