Walmart once tried – and failed – to merge Asda, its UK operation, with Sainsbury’s. Now it has agreed to sell the supermarket chain to “two billionaire brothers from Blackburn”, Moshin and Zuber Issa, and the private-equity firm TDR Capital, says Zoe Wood in The Guardian.
The deal, which will see Walmart retain a minority stake in the company, as well as a seat on the board, values Asda at around £6.8bn, only “slightly more” than the £6.7bn that Walmart paid in 1999. This reflects the fact that, even with Walmart’s “financial power”, Asda has “struggled” in the “ferociously competitive” grocery market.
The “self-made” Issas are touted by Walmart as the “secret sauce” of the deal, says Deirdre Hipwell on Bloomberg. This is because Walmart hopes that the brothers can use their ownership of EG Group, which operates food outlets and stores on over 6,000 different sites, including petrol stations and highway service areas, to help Asda break into the “lucrative convenience-store market”. However, Britain’s convenience-store arena is “crowded with competitors”, with many of the best sites already “snapped up”, while there is also evidence that the rapid growth “may be poised to cool”. Covid-19 has also moved a lot of food shopping online.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The government has welcomed Asda returning to British ownership, says Christopher Williams in The Sunday Telegraph. But the cost of the deal is fuelled by £4bn of junk bonds and leveraged loans, so the Exchequer will be “out of pocket for some time”. The cost of the borrowing will be offset against Asda’s profits.
-
IMF suggests “refinements” to Rachel Reeves’s fiscal rulesThe IMF has upgraded the UK’s growth forecast but wants Reeves to refine her fiscal rules to avoid unnecessary spending cuts or tax rises
-
Invest like a tortoise, not a hare to avoid market volatilityOpinion Hassan Raza, Portfolio Manager at CG Asset Management, highlights three favourite investment companies
-
Investment opportunities in the world of Coca-ColaThere is far more to Coca-Cola than just one giant firm. The companies that bottle and distribute the ubiquitous soft drink are promising investments in their own right.
-
Streaming services are the new magic money tree for investors – but for how long?Opinion Streaming services are in full bloom and laden with profits, but beware – winter is coming, warns Matthew Lynn
-
'Pension funds shouldn't be pushed into private equity sector'Opinion The private-equity party is over, so don't push pension funds into the sector, says Merryn Somerset Webb.
-
Greg Abel: Warren Buffett’s heir takes the throneGreg Abel is considered a safe pair of hands as he takes centre stage at Berkshire Hathaway. But he arrives after one of the hardest acts to follow in investment history, Warren Buffett. Can he thrive?
-
Who will be the next Warren Buffett?Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
