Walmart Considers Stock Market Listing For Asda

Walmart is reportedly thinking about a stock market listing for its British supermarket arm Asda.

“While we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long-term success,” Judith McKenna, the Walmart International CEO, told Asda managers at an event in Leeds in northern England, according to Reuters. She added that preparing for an IPO could “take years.”

The news comes after a merger between Asda and Sainsbury’s was blocked by the U.K.’s Competition and Markets Authority (CMA), which was concerned that the deal would cause longer checkout lines and make prices higher at the gas stations of the supermarkets.

While the companies said the potential merger would have lowered their costs so they could cut prices for shoppers, analysts believed the deal was designed to help the companies contend with Lidl’s and ALDI’s rise.

Asda President and CEO Roger Burnley said last month, “We were right to explore the potential merger with Sainsbury’s, which would have delivered great benefits for customers and supported the long-term, sustainable success of our business.” The CMA, however, contended that the deal would lower competition locally and nationally.

The decision led analysts to speculate that Walmart would attempt to sell Asda to private equity or look into a stock market listing for the business, for which it paid 6.7 billion pounds in 1999.

“Walmart does not have a one-size-fits-all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart,” said McKenna.

Researcher Kantar is predicting that Asda will report an eighth straight quarter of growth when it updates on trading later this week. And Burnley told managers at the Leeds meeting that there would be 80 million pounds of price cuts throughout the rest of the year.