Walmart returns Asda to British ownership in £6.8bn deal

Walmart has agreed to sell UK grocery chain Asda to the Issa brothers and private equity firm, TDR Capital, for an enterprise value of £6.8 billion.

The consortium was rumoured as the preferred bidder for Asda by Sky News earlier this week.

Walmart has been weighing what to do with Asda since a proposed merger with Sainsbury was blocked by the UK competition authority two years ago. The long-awaited sale of a controlling stake in Asda sees it return to majority British ownership for the first time since 1999, when Walmart paid £6.7 billion for the business.

The UK retailer will be offloaded to Mohsin and Zuber Issa, founders and co-CEOs of EG Group – a global convenience and forecourts retailer – and investment funds managed by TDR Capital.

They will join together to acquire an equal majority ownership stake in Asda, while Walmart will retain an ongoing equity investment in the business, a seat on the board and will remain a strategic partner.

In the filing, Walmart said the deal will include a £1 billion cash injection in the next three years to help ensure Asda’s prices remain low and to further strengthen the business and its supply chain. With their experience at EG Group, Issa Brothers are also described as being well placed to support Asda in expanding its presence into convenience retail stores.

New co-owners of Asda, Mohsin and Zuber Issa, said: “We believe that our experience with EG Group, including our expertise around convenience and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy.

“After a successful period as part of Walmart we are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK.”

Following completion of the deal, the existing Asda management team will continue to drive the business’ growth strategy with ongoing access to Walmart’s global sourcing scale and innovation.

The retailer will remain headquartered in Leeds and will continue to be led by CEO Roger Burnley who will form part of Asda’s board alongside representatives appointed by the Issa brothers, TDR Capital and Walmart.

Judith McKenna, president and CEO of Walmart International, added: “We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing.”

The transaction, which is subject to regulatory approval, is anticipated to close in the first half of 2021.