Walmart is mulling a move to list Asda on the stock exchange following the collapse of its merger with rival Sainsbury’s.
The US retail titan’s international boss Judith McKenna told staff the business was “seriously considering” an IPO in a bid to achieve “long-term success” for the grocer.
Speaking at a meeting of 1,200 of Asda’s store, warehouse and head office staff at its Leeds HQ yesterday, McKenna said Walmart was “not rushing” the move and admitted that the potential return to public ownership would “take years”.
Details of Walmart’s ambitions to launch an IPO emerged just three weeks after the Competition and Markets Authority blocked plans for Asda to merge with Sainsbury’s in a £13bn deal.
The supermarket giants said the combined entity would have slashed prices on grocery staples by 10% and improved quality for customers.
The businesses pledged to plough £1bn into prices in the three years following the deal and also offered to offload up to 150 supermarkets in a bid to convince the CMA of the merits of the deal.
But the watchdog ruled that the merger would ultimately lead to higher prices and a reduction in quality for consumers.
Since its verdict in late April, speculation has surrounded what the ‘plan B’ would be for the business, with Walmart keen to reduce its exposure to a fiercely competitive UK market and focus on emerging economies such as India to drive international growth.
McKenna said much of the commentary surrounding Asda’s future was “just speculation”, but added: “Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart.
“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success.”
She added: “You were a good business going into the merger and under Roger’s leadership you – all of you – made this a stronger business over the last year. I believe that looking ahead, you have the potential for even greater things, and Walmart will ensure that you have resources to do that.”
McKenna’s comments to Asda staff yesterday came just hours after she told World Retail Congress that the Asda business was “very close to our hearts” and that Walmart was “focusing on the future and what’s next”.
During the staff meeting, Asda boss Roger Burnley urged them to “forget the language of plan A and plan B” and to focus on building sales momentum.
In his first address to business leaders since the collapse of the merger, Burnley said: “There has always been one clear strategy for Asda – it requires momentum in the short term, growth in the medium term and sustainability in the long term. We need to prioritise and focus on what will make a difference to customers versus what won’t.”
Burnley said Asda would “accelerate” moves to sharpen up its price position, with plans in place to inject £80m into price throughout the rest of 2019.
It will also pilot same-day grocery deliveries and roll out its scan-and-go payments to more supermarkets in a bid to create a “hassle-free” shopping experience for its customers.
As part of that drive, Burnley said Asda’s supermarket in Stevenage would become a “tech store” where a range of new technology would be implemented “to help the retailer understand the benefits” of different innovations.
Analysis: Is there appetite for an Asda IPO?
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Walmart ‘seriously considering’ Asda IPO