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Britain’s Issa brothers and TDR Capital buy Asda from Walmart

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  • Britain’s Issa brothers and TDR Capital buy Asda from Walmart.
  • The agreement values Asda at £6.80 billion.
  • The British supermarket chain to expand into convenience shops.

Walmart Inc. (NYSE: WMT) offloaded its British supermarket chain Asda to Issa brothers and TDR Capital (private equity group) on Friday. The agreement values Asda at £6.80 billion and offers a platform for buyers to launch smaller stores. Walmart reported £4.92 billion of net income in the fiscal second quarter.

Founders of EG Group (petrol station operator), Mohsin and Zuber Issa, are bringing the supermarket chain back under British ownership after two decades. Walmart had acquired Asda in 1999 for £6.7 billion. Asda introduced vegan-only aisles across hundreds of stores last week.

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CEO Judith McKenna of Walmart commented on the news and remarked on Friday:

“The Issa brothers have a reputation for good brand partnerships, for convenience and for growth and that’s really what we were interested in for Asda.”

Asda to expand into convenience shops

The CEO also confirmed that the divestment was not related to job cuts. The new owners expressed plans of expanding into convenience shops – a move that will align Asda more with its bigger rivals, Tesco and Sainsbury’s.

Following the completion of the transaction, Walmart will still hold a minority stake in Asda. The U.S. retail giant will also retain its board seat and commercial relationship with the British supermarket chain.

Roger Burnley will continue to serve as the Chief Executive of Asda. As per Moody’s, the agreement will help Walmart refocus on international markets with a greater potential for long-term upside, like China and India.

McKenna, however, did not highlight for how long does Walmart intends to remain an investor in Asda. He also did not comment if Asda will seek a listing in London. She said:

“The brothers and TDR will help make decisions about what that future path looks like.”

Walmart’s performance in the stock market

Walmart closed the regular session about 1.5% down on Friday and tanked another 0.5% in extended trading. Including the price action, it is now trading at £108 per share versus £92 per share at the start of the year. The stock had plummeted to £80.50 per share in March, when COVID-19 restrictions were at their peak. Trading stocks online is easier than you think. Here’s how you can buy shares online in 2020.

At the time of writing, the American multinational retail corporation has a market cap of £308 billion and a price to earnings ratio of 22.40.