Asda set to boost UK sourcing after acquisition

By Rod Addy contact

- Last updated on GMT

Asda's headquarters will remain in Leeds
Asda's headquarters will remain in Leeds

Related tags: Meat & Seafood, Supply chain, Finance

Asda is set to increase the volume of products sourced from UK suppliers, from chicken and dairy to wheat and potatoes, following its acquisition by joint owners Mohsin and Zuber Issa and TDR Capital.

Walmart issued a statement announcing the agreement on 2 October underlining the aim, as well as highlighting a future commitment to source 100% British beef.

The statement flagged Asda's intent to "increase the proportion of UK-based suppliers, increasing the volume of products - such as chicken, dairy, wheat and potatoes - purchased from UK suppliers each year, as well as a commitment to source 100% British beef".

Wal-Mart further stated that, following the deal, more than £1bn would be invested in the next three years in Asda to further strengthen the business and its supply chain.

Asda would also continue to offer low prices across its stores and product categories for its customers, while retaining 'industry-leading payment terms for suppliers'.

'Continued support' of Walmart

The retailer would "enjoy the continued support and involvement of Walmart as an investor and partner, allowing Asda access to global innovation and buying power"​, Walmart stressed.

Asda chief executive Roger Burnley, who will remain at the helm of Asda, said: “With our combined investment, expertise and ambition; Asda, Walmart, the Issa brothers and TDR have an incredible opportunity to accelerate our existing strategy and develop an even more exciting offer for our customers as well as strengthen our business for our colleagues.

"In a constantly changing retailing environment, our new ownership will further enhance our resilience, whilst creating significant, additional opportunities to drive growth. I want to thank every single one of our people for the incredible work they do serving our communities, and together our focus will remain on building a better Asda for the benefit of all.”

Judith McKenna, president and chief executive officer of Walmart International, said: “We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing.

"I’m delighted that Walmart will retain a significant financial stake, a board seat, and will continue as a strategic partner."

'Iconic British business'

Mohsin and Zuber Issa said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on.

"Asda’s performance through the COVID-19 pandemic has demonstrated the fundamental strength and resilience of the business, and we are excited to support Roger and his team as they continue to reposition the business to drive long-term growth.

“We believe that our experience with EG Group, including our expertise around convenience and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy. After a successful period as part of Walmart we are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the UK.”

Gary Lindsay at TDR Capital said: “Asda is a strong and well-managed business with one of the leading brands in UK retail. We are proud to be investing alongside Mohsin and Zuber, who have built EG Group into a global convenience retailer and will now bring that experience to bear at Asda. We look forward to supporting them, and Roger Burnley and the management team at Asda, to build on the business’s inherent strengths and drive long-term sustainable growth.”

Walmart retaining equity stake

The Issa brothers, founders and co-chief executives of global convenience and forecourt retailer EG Group, and TDR Capital have agreed to jointly acquire Asda from Walmart, with equal shareholdings. Walmart is retaining an equity stake in the supermarket chain.

Asda's headquarters will remain in Leeds. Alongside Burnley, other board members will include representatives from the Issa brothers, TDR Capital and Walmart.

The Issa brothers and investment funds managed by TDR Capital agreed to acquire Asda for an enterprise value of £6.8bn on a debt-free and cash-free basis.

With extensive experience in the convenience sector, the Issa brothers would be "well-placed to support Asda in developing a compelling convenience retail proposition and taking it to market, and to advise on the development of strategic brand partnerships that will better enable Asda to address multiple consumer missions,"​ Walmart stated.

Related topics: Supply Chain, Meat, poultry & seafood

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