BENTONVILLE, Ark. -- Walmart Inc. is selling the majority of its Asda U.K. supermarket business to J Sainsbury PLC, which operates Sainsbury’s, another supermarket chain in the United Kingdom.
As part of the $10 billion deal, which is subject to various approvals, Walmart will retain a 42% stake in the combined company as a shareholder but would hold a voting share of no more than 29.9%, just below the point at which it would be required to make a takeover bid under U.K. laws.
“This proposed merger represents a unique and bold opportunity, consistent with our strategy of looking for new ways to drive international growth,” said Judith McKenna, CEO of Walmart International.
It also provides Bentonville, Ark.-based Walmart with about $4 billion in cash to further fuel its investments in price and digital shopping capabilities.
With $26 billion in annual sales, Asda has seen growth and profits slow as hard discounters Aldi and Lidl have eaten into its traditional pricing advantages, while operators such as Sainsbury’s and Waitrose had more upscale appeal, CSP’s sister publication Winsight Grocery Business reported.
However, the merger of the two, with 2,800 combined Asda and Sainsbury stores, will vault London-based Sainsbury to the No. 1 position in the United Kingdom with 2,800 combined Asda and Sainsbury stores.
Sainsbury said the combination would result in a “more competitive and more resilient business that will be better able to invest in price, quality, range and the technology to create more flexible ways for customers to shop.” It anticipated that prices would decrease by 10% on the products shoppers buy most.
Walmart has more than 11,700 stores under 65 banners in 28 countries. It employs about 2.3 million associates worldwide.
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