16th Feb 2021 15:08
(Alliance News) - Walmart Inc said Tuesday it has completed the sale of UK supermarket Asda Group Ltd, but is still waiting on the green light from the UK's competition regulator.
In October, the billionaire Issa brothers, behind petrol forecourt firm EG Group, and TDR Capital secured a GBP6.8 billion deal to take control of Asda. The Issa brothers and TDR will have equal shareholdings in the grocer.
The Issa brothers and TDR Capital have acquired a majority ownership stake in Asda, while Walmart will retain an equity investment in the firm, with an ongoing commercial relationship and a seat on the board.
The deal was approved by the UK Financial Conduct Authority on February 8. Approval from the UK Competition & Markets Authority remains elusive but is expected in the second quarter. Walmart noted it remains confident of a positive outcome.
In early December, the UK watchdog said it opened the Phase 1 investigation following the European Commission's decision to refer the case to the UK. The CMA's current statutory deadline to announce its decision is February 18.
The US retailer was forced to put Asda back on the market after a merger with J Sainsbury PLC was blocked in 2019 by the CMA, with the regulator finding the merger would leave customers worse off.
Walmart has previously stated that Roger Burnley will stay on as chief executive, leading a board which will have representatives appointed by the Issa brothers, TDR Capital and Walmart.
Under the new owners, the business is expected to invest over GBP1 billion in the next three years in Asda, with the amount to be used to strengthen its supply chain. Walmart noted that based on the current deal terms, it expects to recognise a non-cash loss of around USD2.5 billion after tax in financial 2021.
The new Asda owners have said they will also issue around GBP2.75 billion in loan notes to help finance the acquisition.
The new owners have also laid out plans to take on around GBP3.5 billion of debt financing, sell its petrol station business and intend to sell distribution sites once the takeover of the supermarket group clears regulators.
Operations across the distribution network will be unchanged, with Asda set to retain them on a lease-back arrangement.
EG Group confirmed it had agreed to buy Asda's forecourt business in a deal worth GBP750 million as part of the financial restructuring.
EG, which operates more than 6,000 forecourts globally, said it expects the petrol station takeover to close in the second quarter of 2021.
It is understood that the combination of Asda's forecourt business with EG will also help drive the expansion of more Asda on the Move convenience stores at existing EG petrol stations.
Shares in Walmart were 0.9% higher in New York early Tuesday at USD145.85 each.
By Paul McGowan; [email protected]
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