Walmart Inc WMT.N has picked the founders of petrol station operator EG Group and private equity firm TDR Capital as the preferred bidder for British supermarket chain Asda at a valuation of more than 6.5 billion pounds ($8.4 billion), according to a person familiar with the matter.
Having had its attempt to sell Asda to UK rival Sainsbury’s SBRY.L for 7.3 billion pounds thwarted by Britain’s competition regulator last year, Walmart said in July that it had resumed talks with potential buyers of a majority stake.
A consortium led by Mohsin and Zuber Issa, the billionaire brothers who founded EG Group nearly two decades ago, and TDR buying Asda would bring it back under British ownership for the first time since 1999, when Walmart paid 6.7 billion pounds for the business.
However, a deal has not yet been finalised, the person said, requesting anonymity as the talks are private.
The Issa brothers and TDR have been competing with U.S. PE firm Apollo Global Management for Asda, people familiar with the matter have said.
TDR, EG Group, Asda and Walmart declined to comment. Apollo did not respond to a request for comment, while the Issa brothers could not be reached for comment.
The drop in Asda’s valuation from the proposed Sainsbury’s deal is likely to be because of the integration benefits that a merged Sainsbury’s and Asda would have delivered.
While Asda’s sales have increased during the COVID-19 pandemic, the chain has still lagged Sainsbury’s, Morrisons MRW.L and market leader Tesco TSCO.L.
Asda this month announced a deal with EG Group to develop “Asda on the Move” branded convenience stores on EG petrol forecourts.
Sky News, which first reported on the front-runners for Asda’s acquisition, said the Issa brothers and TDR wanted to retain Asda CEO Roger Burnley. (bit.ly/3cFkHMs)
($1 = 0.7748 pounds)