Return
to Story Page
To print: Select File and then Print from your
browser's menu
Andrew Young and Keith Weir
London, Apr 17: British retailer Kingfisher Plc said it was in talks to take over supermarket chain Asda Plc in a deal to create a European giant with annual sales of some 19 billion pounds ($30.50 billion).
A merger of Kingfisher with ASDA would create Britain's largest retail group, which analysts said could be heading for international expansion in a new hypermarket format.
Initially it would combine Kingfisher's familiar retail brands including Woolworths, B&Q, Superdrug and electrical goods retailers Comet in Britain and Darty in France, with ASDA's supermarket network to create one of the top half dozen of retailers in Europe.
The agreed all-share deal values ASDA at some six billion pounds ($9.63 billion).
Analysts said ASDA shares were supported by speculation that a counter-offer could emerge from overseas.
"People are assuming that Wal-Mart, Ahold -- pick any name -- are going to come in next week with a counter-offer," said Investec Henderson Crosthwaite retail analyst DavidStoddart.
Indeed the shadow of Wal-Mart, the world's largest retailer, loomed large over the deal.
"In terms of creating a business to stand-up against Wal-Mart, this is the best we're going to do in Britain. But whether anyone at all can stand up against Wal-Mart remains an open question," said Chris Dawson, a director at London retail consultancy Management Horizons Europe.
Based in Arkansas, Wal-Mart has acquired two German retail chains and is expected to develop its operations across Europe.
The terms of the deal would involve an exchange of 0.2263 Kingfisher shares for each ASDA share, giving Kingfisher shareholders 66.33 per cent of a group which would be valued at nearly 18 billion pounds. Based on Kingfisher's closing share price on Thursday of 875 pence, it valued ASDA shares at 198 pence each. The companies said they plan to issue a further statement on Monday.
Britain's GMB union, the sole representative of workers at ASDA, welcomed the potential deal saying it could createjobs.
Kingfisher Chief Executive Sir Geoffrey Mulcahy would head the new group with ASDA chief executive Allan Leighton set to become his deputy.
The two companies said that the new group is expected to enable the acceleration of both Kingfisher's and ASDA's growth plans at home, in continental Europe and internationally.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------