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India Walmart revives talks about Asda supermarket sale

India

india Shoppers outside an Asda store

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Walmart has restarted discussions about selling a majority stake in Asda, its UK supermarket, after putting the plans on hold to focus on the pandemic.

The US retail giant had said in February that it was in talks with potential investors in the business.

That came after UK regulators blocked Walmart’s plan to merge Asda with Sainsbury’s last year on fears it would raise prices for consumers.

A Walmart spokesman said it was the “right time” to revive the talks.

“Walmart and Asda have restarted conversations with a small number of third-party investors who are interested in acquiring a stake in Asda and partnering with Walmart, following renewed inbound interest,” the spokesman said.

“There is no certainty that a transaction will happen,” he added.

India ‘Clear strategy’

Walmart, which purchased Leeds-based Asda in 1999, has overhauled its international strategy in recent years, to focus on markets, such as India, where it sees growth and forge alliances with local partners, such as JD.com in China.

In 2018, it announced plans to merge Asda with Sainsbury’s in a deal in which it would retain 42% of the combined business.

After regulators blocked the deal, Walmart said it was considering a stock market flotation for Asda.

Among the top three supermarkets in the UK, Asda claims an estimated 15% of the market. It has faced increased competition from discount chains, especially Germany’s Aldi and Lidl.

In a February survey by consumer group Which?, Asda was ranked worst among supermarkets for customer satisfaction, and behind the German firms when it came to prices.

Asda sales, excluding petrol, increased 3.5% in the three months to 31 March, the company said in May. Including petrol, sales declined.

However, grocery stores such as Walmart have been some of the few retailers to report strong business during the pandemic, as customers focus their spending on essentials.

Walmart said the pandemic had “demonstrated Asda’s resilience and the key role we play in supporting different communities”.

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