The Financial Times reports that Asda is lining up Somerfield. The UK’s number two supermarket chain, owned by US behemoth Wal-Mart, has appointed financial adviser Lazard to explore a possible bid for the fifth largest chain in the country.
According to the FT, it is unclear as yet whether Asda has firm intentions to put in an offer, but “its interest in Somerfield will put pressure on other potential bidders to formalise their offers”.
Those potential bidders have been mounting up in the last couple of months and include Baugur, the acquisitive Icelandic giant that has already tabled a £1bn bid, and which has now joined forces with another interested consortium, as well as property groups London Regional and Topland.
Asda has been conspicuous by its absence from the gung-ho entrance of the larger supermarket chains into the convenience store sector in the last 18 months. Somerfield’s network of mostly smaller sized supermarkets would mark a change of course for Asda and, said the FT, a “significant development of Wal-Mart’s UK strategy.
Tesco is expected to be the biggest c-store operator by the end of this year and Asda would have immediate access to more than 1,250 stores should it purchase Somerfield without need to go through a Competition Enquiry process.
The distinction between c-store and supermarket sectors under competition rules in the UK has been under fire as Tesco and Sainsbury’s moved in, and any further move by Asda would reignite that particular argument.
• Meanwhile, the FT also reports that US retailers pursuing overseas expansion have roughly a one-in-three chance of success, according to research by Bain, the management consultants.
The Bain study looked at about 100 overseas moves by US retailers over 15 years. The findings are part of a study of 300 expansion moves by US retail companies, including acquisitions and moves into new channels including e-commerce.
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