BENTONVILLE, Ark. -- (Business Wire)
Walmart Inc. (“Walmart”) and J Sainsbury plc ("Sainsbury’s")
today announce the combination (the “Combination”) of Sainsbury’s and
Asda Group Limited ("Asda"), Walmart’s wholly owned UK
retail subsidiary (the "Combined Business"). At a time of significant
and rapid change in the retail sector, the Combination will create one
of the UK’s leading grocery, general merchandise and clothing retail
groups. Bringing together two distinctive customer propositions will
create a more competitive, adaptable and resilient business - better
placed to invest in price, quality, range and more flexible ways for
customers to shop.
Under the terms of the Combination, which is subject to various
approvals, including from the Competition and Markets Authority, Walmart
would hold 42 percent of the share capital of the Combined Business.
This holding will be made up of 29.9 percent of Sainsbury’s ordinary
shares, with full voting rights attached, with the balance held as
non-voting shares convertible into voting shares. In addition, Walmart
would receive approximately £2.975 billion in cash, subject to customary
closing adjustments, valuing Asda at approximately £7.3 billion on a
debt-free, cash-free and pension-free basis. Walmart would retain the
Asda defined benefit pension scheme as part of the combination, along
with any ongoing defined benefit pension related obligations.
"We believe the Combination offers a unique and exciting opportunity
that benefits customers and colleagues,” said Doug McMillon, Walmart’s
president and chief executive officer. “As a company, we’ve benefited
from doing business in the UK for many years, and we look forward to
working closely with Sainsbury’s to deliver the benefits of the
combination."
Walmart is embracing technology and thinking differently to serve
customers and drive growth. That includes developing partnerships like
this one to unlock value for shareholders and customers in the UK.
As a strategic long-term partner, Walmart will share its global retail
network and knowledge. The Combined Business will have enhanced
capabilities and a strengthened balance sheet to help deliver value and
opportunities for customers, colleagues, suppliers and shareholders of
both businesses.
The new business will operate a distinctive dual brand strategy. Asda
would continue to be run from Leeds by its own CEO, Roger Burnley, who
would join the Group Operating Board of the Combined Business, ensuring
Asda retains its heritage and roots. Key benefits of the Combination
include:
-
Creating one of the UK’s leading grocery, general merchandise and
clothing retail groups, with combined revenues of c.£51 billion for
2017A1
-
Enabling investment in areas that will benefit customers the most:
price, quality, range and creating more flexible ways to shop, across
Sainsbury’s, Asda and Argos. It is expected that value will be passed
on to customers through significant price reductions
-
Maintaining both the Sainsbury’s and Asda brands and enabling them to
sharpen their distinct customer propositions and attract new customers
-
Offering more opportunities for over 330,000 colleagues at all levels
within the enlarged and more resilient group, drawing on the shared
values and heritage of both businesses
-
Combining a complementary network of more than 2,800 Sainsbury’s, Asda
and Argos stores and several of the UK’s most visited retail websites
to create greater choice for customers through more store formats and
channels, with a combined 47 million customer transactions per week
-
Generating net synergies, post price investments, across the enlarged
group of at least £500 million. These are comprised largely of buying
benefits, opening Argos in Asda stores and operational efficiencies.
There are no planned Sainsbury’s or Asda store closures as a result of
the Combination
-
A comprehensive range of channels and formats across supercenters,
superstores, supermarkets, convenience stores and digital
Based on the current deal terms, Walmart expects to recognize a non-cash
loss of approximately $2 billion, which is based on the current value of
shares to be received and current foreign exchange rates. This estimate
could fluctuate significantly due to changes in the fair value of the
equity consideration to be received and changes in currency exchange
rates. Due to the conditions to complete the transaction, including
regulatory approval which could extend into the second half of calendar
year 2019, the timing of the loss recognition is not yet determined.
Walmart expects the impact to earnings to be slightly dilutive in the
first full year following completion of the transaction and neutral to
slightly accretive in subsequent years, as synergies are realized.
Walmart will update further after the deal closes. Walmart is scheduled
to report first quarter results on May 17, 2018.
For more details on the combination, please refer to Sainsbury’s
announcement here.
About Walmart
Walmart Inc. (NYSE: WMT) helps people around the world save money and
live better - anytime and anywhere - in retail stores, online, and
through their mobile devices. Each week, nearly 270 million customers
and members visit our more than 11,700 stores under 65 banners in 28
countries and eCommerce websites. With fiscal year 2018 revenue of
$500.3 billion, Walmart employs approximately 2.3 million associates
worldwide. Walmart continues to be a leader in sustainability, corporate
philanthropy and employment opportunity. Additional information about
Walmart can be found by visiting http://corporate.Walmart.com,
on Facebook at http://facebook.com/Walmart and
on Twitter at http://twitter.com/Walmart.
About Asda, a wholly owned subsidiary of Walmart
Asda is a UK retailer founded in 1949 serving around 19 million
customers a week and currently employs more than 146,000 people across
the UK. It has a multi-format, omni-channel offering, selling its
products through a network of 584 grocery stores, 18 standalone petrol
filling stations and 33 Asda Living stores and also online. In addition
to grocery and general merchandise, Asda also operates George, a leading
UK clothing retailer with both an in-store and online offering. The
company has a significant property portfolio, of which 75 percent of the
square footage is freehold.
Forward Looking Statements
The statements in this press release regarding the impact of this
transaction are believed to be “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended (the “Act”), that are intended to enjoy the protection of the
safe harbor for forward-looking statements provided by the Act. These
forward-looking statements are subject to certain risks, uncertainties
and other factors.
Walmart was advised by Rothschild and Credit Suisse in relation to the
transaction.
1 Based on the unaudited full year results for the year ended
31 December 2017 for Asda and the unaudited full year results for the 52
weeks to 10 March 2018 for Sainsbury’s. The Asda Group Limited financial
information for the financial year to 31 December 2017 included here and
elsewhere in this announcement are unaudited estimates and subject to
change.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180429005117/en/
Contacts:
Walmart Inc.
Walmart Media Relations:
1-800-331-0085
news.Walmart.com/reporter
or
Walmart
Investor Relations:
Kary Brunner, 479-277-8782
Source: Walmart Inc.
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