Mar 17, 2020 - Economy & Business

Walmart receives bids for multi-billion stake in U.K. supermarket Asda

Photo: Matthew Horwood/Getty Images

Walmart received several first-round bids for a majority stake in the British supermarket chain Asda, which could fetch at least £7 billion, per Bloomberg.

Why it matters: This is a big test of whether private equity can still secure large debt financing packages at attractive rates.

  • Suitors are Apollo Global Management, Lone Star Funds, and TDR Capital (paired with EG Group).

The backdrop: Asda and rival Sainsbury’s last year tried to merge, but were blocked by U.K. competition regulators. Walmart subsequently considered a public listing, but seems to have instead settled on a sale process.

The bottom line: "U.K. grocers are facing surging demand from shoppers stockpiling essential items. That’s made them a bright spot in the consumer industry, which overall has been hurt as the coronavirus outbreak leads to shop closures and less foot traffic. Still, the high demand for everyday goods is putting immense pressure on supply chains, and over the weekend some of the country’s largest supermarket chains published a letter in national newspapers asking consumers to stop stockpiling," per Bloomberg.

Go deeper

Ramen sales jump as Americans stockpile for coronavirus

Photo: Rita Maas/Getty Images

Online ramen noodle sales have skyrocketed 578% between Feb. 23 and March 21, as American consumers continue to stash reserves of non-perishables during the coronavirus pandemic, according to a company presentation cited by Bloomberg.

The big picture: Sales of shelf-stable products, including pastas and canned soups, have swelled more than 400% in recent weeks. However, consumers' spending habits throughout the outbreak have recently shifted to office supplies, toys and exercise equipment — a period Walmart has dubbed "Restricted Living," Bloomberg writes.

Private equity hits the brakes amid coronavirus recovery uncertainties

Illustration: Rebecca Zisser/Axios

Private equity is still working on opportunistic deals when it can get a break from portfolio triage, but it's also boarding up the exits amid new questions about the speed of the coronavirus recovery.

The state of play: Sale processes are being shelved daily, even ones that already launched with investment bankers, data rooms, and interested suitors.

Freight disruptions significantly delay vital coronavirus supplies

A new shipment of facemasks arriving in Liege, Belgium, on March 23. Photo: Vincent Kalut / Photonews via Getty Images

The backup in global supply chains plus a manufacturing and transportation sector already weakened by the U.S.-China trade war are combining to slow the rate of goods deliveries to nearly double their normal times.

What's happening: "Freight carriers are struggling to deliver goods by land, sea or air as the coronavirus pandemic forces Western governments to impose lockdowns, threatening supplies of vital products including medicines into the most affected areas, such as Italy," Reuters reports.