Apollo set to win Asda bid race as Lone Star exits

By

Barbara Santamaria

Published
Sep 23, 2020

UK supermarket chain Asda looks set to be hived off from owner Walmart, with American private equity firm Apollo Global Management emerging as the frontrunner to buy the grocer.

Apollo is seen as the favourite to acquire a majority stake in the chain after rival Lone Star, another private equity group, pulled out of the race earlier this week. According to the Daily Telegraph, Lone Star’s bid failed to meet Walmart’s price expectations, leaving Apollo and TDR Capital as the remaining bidders.  

A possible deal could be announced as early as the end of this month. 

Apollo is understood to be working with retail veteran Rob Templeman, the former boss of Debenhams, while TDR Capital’s bid is backed by the billionaire Issa brothers, who are behind forecourt operator EG Group.

Walmart restarted talks on the sale of a stake in Asda in July, but a long-running dispute involving the grocer could be a major hurdle towards securing a deal. The case, the largest equal pay claim to ever be brought against an employer in the UK, is being considered by the Supreme Court this year. Its outcome, and determining who might be responsible for any potential liabilities, is a big concern for bidders.

Asda, which is one of Britain’s four biggest supermarket companies, got a sales boost in the first quarter of the year as consumers prepared for the Covid-19 lockdown. Like-for-like sales, excluding petrol, grew by 3.5% during the period, but there was weaker demand for clothing and the retailer experienced higher staffing costs.

A proposed merger with rival Sainsbury’s, which valued Asda at about £7 billion, was blocked by the Competition and Markets Authority last year over fears it would lead to increased prices.

Asda currently accounts for about 15% of the nation’s grocery market.