Asda extends its reach with Netto deal
By Mark Potter |
May 28, 2010, Friday
|
Print Edition
Print Edition
WAL-MART, the United States retailer, is buying Netto UK from its Danish owner for 778 million pounds (US$1.1 billion) and will convert the stores to its Asda brand, cementing its position as the UK's No. 2 grocer.
Wal-Mart Stores Inc, the world's largest retailer, generates about 25 percent of its annual US$405 billion sales outside the US. It bought Britain's Asda in 1999.
Asda said yesterday it was buying discounter Netto's 193 stores in the UK.
Dansk Supermarked, majority-owned by Danish conglomerate AP Moller-Maersk, said it would now focus on expanding Netto in Scandinavia and Northern Europe.
Collins Stewart analyst Greg Lawless said the deal would help Asda fulfil one of its main ambitions - to become a clear UK No. 2 in food.
Asda is currently Britain's second-biggest supermarket group ahead of J Sainsbury, but only thanks to its stronger position in non-food ranges. The top supermarket groups in the UK have been battling to extend their reach into smaller format stores.
"It takes Asda into neighborhoods where its name will be known and that its out-of-town stores currently don't reach," Lawless said.
Analysts said the deal might fuel speculation that Asda will look to buy a general merchandise retailer.
The group said last month that as well as growing its smaller format stores, it wanted to overtake Tesco to become Britain's biggest non-food retailer.
Some analysts have suggested Asda might bid for Britain's Home Retail.
Asda said it would offer a fuller range of products in converted Netto stores, rather than the limited range sold by discounters.
Discounters such as Netto, Aldi and Lidl briefly saw a surge in growth at the start of the recession.
But that growth faded as major supermarkets stepped up promotions and introduced cut-price ranges.
Wal-Mart Stores Inc, the world's largest retailer, generates about 25 percent of its annual US$405 billion sales outside the US. It bought Britain's Asda in 1999.
Asda said yesterday it was buying discounter Netto's 193 stores in the UK.
Dansk Supermarked, majority-owned by Danish conglomerate AP Moller-Maersk, said it would now focus on expanding Netto in Scandinavia and Northern Europe.
Collins Stewart analyst Greg Lawless said the deal would help Asda fulfil one of its main ambitions - to become a clear UK No. 2 in food.
Asda is currently Britain's second-biggest supermarket group ahead of J Sainsbury, but only thanks to its stronger position in non-food ranges. The top supermarket groups in the UK have been battling to extend their reach into smaller format stores.
"It takes Asda into neighborhoods where its name will be known and that its out-of-town stores currently don't reach," Lawless said.
Analysts said the deal might fuel speculation that Asda will look to buy a general merchandise retailer.
The group said last month that as well as growing its smaller format stores, it wanted to overtake Tesco to become Britain's biggest non-food retailer.
Some analysts have suggested Asda might bid for Britain's Home Retail.
Asda said it would offer a fuller range of products in converted Netto stores, rather than the limited range sold by discounters.
Discounters such as Netto, Aldi and Lidl briefly saw a surge in growth at the start of the recession.
But that growth faded as major supermarkets stepped up promotions and introduced cut-price ranges.
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