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Asda to join race for Iceland takeover?


The UK’s second largest grocer Asda has joined the race to acquire frozen food retailer Iceland, according to The Sunday Times.

A report published by the newspaper yesterday suggested that Asda’s US-based parent company Walmart is considering an acquisition of Iceland as a way of expanding its international portfolio in the wake of sluggish sales at home.

Investment bank Lazard, which worked with Asda during the recent takeover of budget grocer Netto, is reportedly working with the UK supermarket to advise on financing such a deal, which could total up to £1.6 billion.

Bradford-based grocer Morrisons and Iceland’s Founder and CEO Malcolm Walker are also rumoured to be interested in a takeover, potentially making it a three-horse race for the company that Kantar Worldpanel suggests accounts for 1.9 per cent of grocery market sales in the UK.

Asda and Morrisons would both be able to significantly expand their presence in the convenience market in the south of England with a purchase of this nature, while Walker is looking to take full control over a business he currently has a 26 per cent stake in.

It emerged that Iceland was up for sale on May 10th this year when majority owner Landsbanki brought in UBS and Bank of America Merrill Lynch as financial advisers, with the task of finding a buyer for the retailer.

Commenting last month, Retail Analyst Jonathan Banks told Retail Gazette: “It would be a marvellous piece of business for Morrisons if the price is right, and it would have fewer Competition Commission issues to worry about than if a company such as Tesco made a bid.”

With Asda’s recent expansion following the takeover of Netto and the fact its share of the market is six per cent larger than Morrisons’, it could be argued that the smaller supermarket group is in the driving seat for acquiring Iceland.

Both Asda and Morrisons have refused to comment on any potential deal.

Published on Monday 06 June by Editorial Assistant

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