Asda considers bid for B&M

Published on: 24th July 2017

Britain’s third-biggest supermarket could be next to diversify in response to budget competitors Aldi and Lidl.

According to media reports, Asda is considering a move for the discount chain B&M, in what would be the latest attempt by a major supermarket to diversify in the face of growing competition from cheaper rivals.

A takeover of the budget retailer would be expected to cost more than £4bn. Asda, the third-biggest supermarket chain in Britain, has seen sales dwindle in the past three years and could use the 500 B&M stores as a further outlet for products such as its George clothing range.

Walmart-owned Asda refused to deny or confirm reports that it was in the early stages of assessing a bid for B&M, which opened its first store in 1978 but has rapidly expanded in Britain’s years of austerity.

Unlike Tesco and Sainsbury’s, Asda only operates large outlets, and has been unable to tap into the rise of convenience stores. The B&M deal could allow Asda to counter this latest incursion into its territory and compete with other leading grocers in local stores.

B&M was bought by the Arora brothers in 2004 and has almost doubled in size in the past five years. Last month, the brothers cashed in nearly £230m worth of shares in the business, cutting their stake from about 21% to 15% and taking their total proceeds since B&M floated to nearly £1bn.

According to the Sunday Times, Asda has commissioned external research on B&M with a view to a potential bid, suggesting that Walmart is now prepared to reinvest to prop up the ailing chain rather than offload it.

As Asda spokeswoman said the firm would not comment on market speculation. B&M also refused to comment, but is understood to have had no knowledge of potential interest from Asda.


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