Wired News – Walmart and Sainsbury’s Announce Merger of Sainsbury’s And Asda

LONDON, UK / ACCESSWIRE / May 02, 2018 / Active-Investors.com has just released a free research report on Walmart Inc. (NYSE: WMT). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=WMT as the Company’s latest news hit the wire. On April 30, 2018, the Company, which is an American multinational retail corporation, and J Sainsbury PLC declared the combination of Sainsbury’s and Walmart’s wholly-owned UK retail subsidiary, Asda Group Ltd (“Asda”). Register today and get access to over 1000 Free Research Reports by joining our site below:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Walmart most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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About Asda Group Ltd

Asda is a multi-format, omni-channel retailer selling its products through a network of 584 grocery stores, 18 standalone petrol filling stations, and 33 Asda Living stores and online. Asda serves about 19 million customers a week and currently employs more than 146,000 people across the UK.

Deal To Create One of the Largest Retailer in UK

Walmart is embracing technology and developing partnerships to unlock value for its shareholders and customers in the UK. This deal comes at a time when the global retail landscape is undergoing a significant change. The combination of Asda with Sainsbury’s will create one of the leading grocery, general merchandise, and clothing retail groups in the UK. The combined entity is expected to surpass Tesco, which is currently the largest retailer in the UK with a 25% market share.

Walmart will bring to the table its global retail network and retail expertise. The combined business will have enhanced capabilities and a strong balance sheet to help deliver value and opportunities for customers, colleagues, suppliers, and shareholders of both businesses. Besides, the combined entity would be a more competitive, adaptable, and resilient business, which would be better placed to invest in price, quality, and range. It would also be capable of offering more flexible ways for customers to shop.

A Distinctive Dual Brand Strategy

The new combined entity will operate under a distinctive dual brand strategy. Roger Burnley, Asda’s Chief Executive Officer (CEO), will continue to manage Asda from Leeds. In fact, he will also join the Group Operating Board of the combined business to ensure that Asda retains its heritage and roots.

Terms and Conditions of the Deal

As per the terms of the deal, Walmart would hold 42% of the share capital of the combined business and would get around £2.975 billion in cash, subject to customary closing adjustments.
This transaction values Asda at approximately £7.3 billion on a debt-free, cash-free, and pension-free basis.
Besides, Walmart would retain Asda’s defined benefit pension scheme as part of the combination, along with any other ongoing defined benefit pension-related obligations.
The combined entity will be made up of 29.9% of Sainsbury’s ordinary shares, with full voting rights attached, while the remaining will be held as non-voting shares convertible into voting shares.
At present, the transaction is subject to various approvals from agencies, such as the Competition and Markets Authority.

Strategic Benefits

The deal would create one of the UK’s leading grocery, general merchandise, and clothing retail groups. Bringing together the two retail giants will enable investment in areas that would benefit customers, i.e. price, quality, range, and flexible ways of shopping across Sainsbury’s, Asda, and Argos. The combination would also lead to significant price reductions for customers.
This deal will not only maintain Sainsbury’s and Asda brands but also enable them to improve their distinct customer propositions and attract new customers.
In fact, the merger would offer greater opportunities for over 330,000 colleagues at all levels in the combined group, owing to the shared values and heritage of both businesses.
The merger brings together a complementary network of over 2,800 Sainsbury’s, Asda, and Argos stores, and some of the most visited websites of the UK to offer customers a wider choice through more store formats and channels. The combined entity would have approximately 47 million customer transactions per week.
The deal is expected to generate net synergies, post price investments, of at least £500 million across the whole group. The combined business would gain from buying benefits, opening Argos in Asda stores, and operational efficiencies. However, there are no planned Sainsbury’s or Asda store closures due to the combination.
The deal also offers a comprehensive range of channels and formats across supercenters, superstores, supermarkets, convenience stores, and digital.

Financial Implications

According to the current terms and conditions of the deal, Walmart would recognize a non-cash loss of approximately $2 billion. However, this estimate would vary due to changes in the fair value of the equity consideration and changes in currency exchange rates.

The transaction is still subject to certain conditions, including regulatory approvals. Thus, closing could extend into the second half of 2019, and the timing of the loss recognition cannot be determined at present.

Walmart expects that the impact on earnings would be marginally dilutive in the first full year after completion of the transaction, and neutral to slightly accretive in the following years, as and when synergies are realized. Walmart is expected to report its first quarter results on May 17, 2018.

Stock Performance Snapshot

May 01, 2018 – At Tuesday’s closing bell, Walmart’s stock dropped 1.19%, ending the trading session at $87.41.

Volume traded for the day: 6.93 million shares.

Stock performance in the last month – up 2.17%; and past twelve-month period – up 16.19%

After yesterday’s close, Walmart’s market cap was at $257.72 billion.

Price to Earnings (P/E) ratio was at 27.30.

The stock has a dividend yield of 2.38%.

The stock is part of the Services sector, categorized under the Discount, Variety Stores industry. This sector was up 0.2% at the end of the session.

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