UK grocer J Sainsbury Plc is in advanced talks with Walmart Inc. about combining with its Asda unit, in what could be a multibillion-pound deal creating a stronger rival to British supermarket leader Tesco Plc.
Sainsbury's confirmed the talks following a Bloomberg News report and said a further announcement would be made on Monday.
The talks are an effort by Sainsbury's to gain scale in a brutally competitive retail market where department-store chain BHS, electronics retailer Maplin and the UK arm of Toys "R" Us have gone bust. For Walmart, the possible deal could pave the way for a further retrenchment of its international ambitions as the company focuses on competing with Amazon.com Inc. at home.
A combination of Sainsbury's, the UK’s second-largest grocer, with No. 3 Asda could push the combined company past Tesco. Each of the two smaller grocers has just under 16 percent of the UK market, according to Kantar Worldpanel, so a combined entity would have a nearly one-third share, compared with Tesco’s 28 percent.
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A representative for Asda declined to comment. Walmart could not immediately be reached for comment.
While the exact terms of the transaction couldn’t be immediately learned, Walmart could retain a significant stake in the combined entity, according to people familiar with the situation.
The talks come at a time when the country’s retailers are under a growing threat from Amazon. Supermarket operators have been cutting thousands of jobs in response to a pricing squeeze exacerbated by the Brexit-induced weakness of the pound. Combining the two companies would give them greater leverage with suppliers -- something Tesco has used to keep a lid on its sourcing costs.
Asda, known for its low prices, has struggled amid the rise of discounters Lidl Ltd and Aldi Stores Ltd, which have undercut the Walmart unit on its biggest selling point. Those companies, both based in Germany, have risen from also-rans to major competitors in the British market over the last decade.
Sainsbury Chief Executive Officer Mike Coupe previously worked at Asda and other UK retailers. London-based Sainsbury's, with a market valuation of £5.9 billion (Dh29.7bn), expanded into selling household goods via its £1.4bn of Argos in 2016. The Qatar Investment Authority is the company’s largest shareholder, with a 22 percent stake.
Walmart acquired Asda for £6.7bn in 1999, at a time when the US company was expanding aggressively overseas. Since then it has backed out of international markets ranging from Germany to South Korea.
Combining Asda with Sainsbury's could present challenges. The Walmart division is favoured by shoppers on tight budgets, while Sainsbury's appeals to a more affluent crowd. Sainsbury's has expanded aggressively into convenience stores and is focused on the south of England around London, while Asda has more large supermarkets spread across the country’s north. That geographical distribution limits store overlap.
Sainsbury's may have been encouraged by the regulatory response to Tesco’s recent purchase of wholesaler Booker Group Plc, which UK authorities cleared after concluding it posed no major threat to competition.
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Company profile
Name: Infinite8
Based: Dubai
Launch year: 2017
Number of employees: 90
Sector: Online gaming industry
Funding: $1.2m from a UAE angel investor
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Killing of Qassem Suleimani
Switching%20sides
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TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
