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Various private-equity firms have shown a strong interest in Asda. The deal could value Asda at more than 7 billion pounds ($8.6 billion). But because of coronavirus, Walmart has paused the sale process.
In Thursday’s trading session, Walmart (NASDAQ: WMT) stock rises by 3.95% to close at $118.65. The range of the day varies from $112.35 to $117.71. In pre-market trading today, Walmart stock rises by another 0.04% to reach $118.70. Over the past seven days, Walmart stock has been not very stable, with a price of $117.7000 at its highest and $106.8700 at its lowest point.
Notably, Walmart stock, which is one of the major Dow Jones stocks, has fallen by 4.4% in the first quarter of 2020. This drop coincides with Walmart’s sales success amidst the coronavirus fears. Because of COVID-19, consumers stock up and form a huge demand in some essentials. But this will not save the retailer’s earnings, which are expected to be much lower Walmart management predicted.
Dow Jones Industrial Average Index itself has fallen over 23% in the first quarter of 2020. This is the worst quarter for the past four decades and the worst Q1 for a long period.
Walmart Pauses the Sale of Asda Majority Stake
Because of the coronavirus outbreak, many companies have to give up their strategic, financial, expansion plans. Walmart has also made a decision to put living up some of its plans on hold. In particular, Walmart will wait with selling a majority stake in UK chain Asda till better days. Instead, the company will focus more on managing its activity in the wake of a surge in grocery orders caused by the coronavirus outbreak. Asda will also pay more attention to its day-to-day business.
Neither Walmart nor Asda commented on the news.
Asda is a British supermarket chain with headquarters in Leeds, West Yorkshire. Founded in 1949, it was listed on the London Stock Exchange in 1999 and then acquired by Walmart for £6.7 billion. In August 2009, Walmart sold Asda for £6.9 billion to its Leeds-based investment subsidiary Corinth Services Limited. The deal was a part of a ‘group restructuring’ which meant that Asda remained under the control of Walmart.
In April 2018, Walmart and the UK’s second-largest supermarket chain Sainsbury’s started negotiations about a possible merger of Sainsbury’s and Asda. The plan was to create the largest supermarket chain in the UK. As a result of the merger, Walmart would own 42% of the combined business, while the chief executive of Sainsbury’s Mike Coupe would be the leader. But the deal was not signed because of the Competition and Markets Authority (CMA) that suggested it would increase prices and make competition unfair for the other UK retailers.
Since then, various private-equity firms started showing a strong interest in Asda. For example, Apollo Global Management Inc., Lone Star Funds and TDR Capital submitted their first-round offers for Asda last month. The deal could value Asda at more than 7 billion pounds ($8.6 billion). However, now there will be a pause in the sale process.
When Walmart will resume the sale is not yet clear.