Why is Walmart in talks to sell majority stake in Asda?

Walmart has shared that it is in active discussions to sell its majority share of Asda. We look at the US giant’s possible motives. 

It has been widely circulated that Walmart is in discussions with a number of private equity firms to try and sell its majority stake in the company. In a statement the company shared: “Following inbound interest Walmart and Asda can confirm that we are currently considering whether there is an opportunity for a third party to invest in Asda, alongside Walmart, in order to support and accelerate the delivery of Asda's strategy and position Asda for long term success.”

The joint statement by Walmart and Asda said: “Together, we are in discussions with a small number of interested parties who share Walmart and Asda's commitment and passion to growing the business – and who share our values, both for our customers and colleagues.”

Offloading dead weight?

Walmart has been trying to sell Asda for two years now. This decision comes shortly after UK regulators blocked Walmart’s billion-pound deal to merge Asda and Sainsbury’s in 2019, as it was argued it would increase prices for UK consumers. The merger would have forged a supermarket that would overtake lead competitor, Tesco, as merging revenues would amount to as much as £51bn. However, Should Walmart proceed with a sale, it is understood that it would still retain a minority share.

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The company added: 'Walmart firmly believes that an IPO (stock market listing) is an attractive long-term objective for Asda.

'Asda is a great business with a clear strategy for the future and Walmart is committed to ensuring it has the resources and support it needs to deliver that strategy.'

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