The sale of Walmart Inc.'s U.K. grocery business Asda is a step closer to receiving antitrust approval from that country's antitrust authorities.

In an effort to placate the UK's Competition and Markets Authority, Asda purchasers Zuber and Mohsin Issa and private equity firm TDR Capital agreed to divest 27 gas stations they jointly hold on Wednesday.

The authority said in a statement Wednesday that it will likely allow the application, despite concerns that the purchasers' purchase of Asda would restrict competition and boost gasoline costs. Asda Walmart employees can login here at asda.walmartone.com.

The buyers' plan, announced in February, to sell Asda's on-premises gas stations to EG Group, which they also own, for around $1 billion after their purchase of Asda from Walmart is finalized, is at the crux of the problem.

According to the authority, EG Group has thousands of petrol stations and convenience stores around the world, including 395 in the United Kingdom, while Asda owns 323.

Last month, the authority predicted that Asda's sale to the Issa brothers and TDR Capital would lead to higher petrol costs in at least 36 regions.

The first phase of the examination, known as Phase 1, began in December and focused on the markets where both corporations own gas stations.

"Our objective is to protect consumers by ensuring that vigorous competition between gas stations remains, resulting in lower prices at the pump," said Joel Bamford, Senior Director of Mergers, in the authority's April 20 report.

"These are two big participants in the market," Bamford said, "and it's critical that we thoroughly assess the deal to ensure that individuals don't wind up paying too much."

Regulators have five working days to decide whether to accept any of the ideas or submit the matter to a more thorough review, known as Phase 2.

On April 20, Asda released a statement detailing the situation on their corporate website. Only a remark from the buyers' spokeswoman, who said, "We will be working constructively with the CMA over the next 10 days in order to arrive at a satisfying resolution for all parties within Phase 1," is included in the report, which was co-published by the Issa brothers and TDR Capital.

"This would provide much-needed confidence for our workers, suppliers, and consumers, allowing us to move forward with our ambitious plans for Asda investment and growth."

A request for comment on Wednesday's events was not immediately returned by Walmart.

In February, the Issa brothers and TDR Capital agreed to buy a majority stake in Asda from Walmart for $9.3 billion, subject to regulatory approval. Walmart, based in Bentonville, would keep a minority share in the company and a seat on the board of directors under the new ownership.

Under the terms of the sale agreement, Asda Chief Executive Officer Roger Burnley would remain in his position. In March, he announced that he would depart the company after completing the transition to new ownership.

This isn't the first time Walmart has had to deal with UK regulators. Walmart's plan to sell a majority stake in Asda to rival grocery chain Sainsbury's was rejected by the Competition and Markets Authority in April 2019.

That deal would have resulted in the United Kingdom's largest grocery network. Regulators anticipated that a lack of competition would result in higher pricing and a narrower range of products.

Hide Comments | Add Comment