Asda sources downplay B&M takeover interest


Senior Asda sources have dismissed reports that the supermarket chain is planning a £4.4 bn takeover of discount retailer B&M.

Speculation about a move follows a radical shake-up within Britain’s supermarkets which are having to rapidly adapt to changing shopping habits, the Telegraph reports.

Sainsbury’s swoop on Argos last year has to date paid-off by bolstering weakening food sales, while Tesco’s £3.7 bn takeover of Booker has sparked a round of consolidation talks between convenience retailers, with Sainsbury’s now eyeing Nisa.

However, senior Asda sources said that there was no truth to speculation that it was mulling a takeover of B&M and said that its US parent, Walmart, was in charge of mergers and acquisitions.

Trevor Green, fund manager at Aviva Investors which hold a 0.3 per cent stake in B&M, said any deal would require Walmart “to pay up for a growth business”.

He said: “The customer fit between the two is obviously excellent and there would be other obvious revenue and cost synergies. But the big question is whether WalMart is willing to write a cheque for £4.4 bn to increase its exposure to the UK market.”

B&M, which is chaired by former Tesco boss Sir Terry Leahy, has grown rapidly following a rampant expansion plan. Simon Arora, who runs the business with his brother Bobby, plans to grow the estate from 543 shops to 950 across the UK.

Last month the Arora family cashed in nearly £230m of shares after cutting their stake in the business to 15 per cent from about 21 per cent in a share placing. They are now estimated to be worth almost £2bn. It is understood that B&M has no knowledge of Asda’s interest.

Walmart has been on an acquisitive streak in the US, but has focused primarily on online businesses to bolster its defences against Amazon, which has stepped up its grocery interests with a takeover of Whole Foods.

Walmart last year agreed a $3bn cash deal to buy online and followed this up with smaller online retailers, Moosejaw, Shoebuy and Bonobos.

In the UK Asda has been struggling to engineer a revival after being battered by the rise of German discounters Aldi and Lidl which have stolen market share and last year claimed the scalp of boss Andy Clarke.

New chief executive Sean Clarke, who had previously been running Walmart China,

has focused on selected price cuts to improve the rate of decline from its worst fall on record, a 7.5 per cent drop last August, to 2.8 per cent in the 13 weeks to 28 April.

Asda declined to comment. It will reveal its half-year results next month.