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. Last Updated: 07/27/2016

Wal-Mart Buys Britain's ASDA




LONDON -- U.S. retail giant Wal-Mart Stores Inc. moved swiftly Tuesday to clinch its takeover of Britain's Asda Group PLC, building a significant stake in the supermarket chain.


As Wal-Mart gobbled up Asda stock following Monday's agreed cash bid of pounds 6.7 billion ($10.8 billion), British newspapers welcomed the cut-price Americans while highlighting the culture shock of consuming the Wal-Mart way.


"The prospect of Wal-Mart's arrival on these scandalously high-priced shores is as welcome as rain in the desert," the Daily Mail said in an editorial.


Investment bank Dresdner Kleinwort Benson said Tuesday that it had bought some 352 million Asda shares Monday - 11.53 percent of the company - on behalf of Wal-Mart. It bought most of them for 220 pence ($3.54), the same as Wal-Mart's bid price.


After parting with more than pounds 770 million for Asda shares Monday, Wal-Mart's spending spree continued Tuesday. Market sources said another 100 million shares - about 3 percent - were bought by 10:20 a.m.


Asda shares slipped up to 217 pence Tuesday.


"Wal-Mart have no reason to stop buying. If they buy a stake it reduces the risk of someone else coming in," one retail analyst in London commented.


Asda's previous suitor, Britain's Kingfisher PLC, acknowledged that Wal-Mart's move had knocked out its own all-paper offer.


The late Sam Walton, who opened the first Wal-Mart in Arkansas in 1962, made his billions with high volume, low overheads and one golden rule - the customer is always No. 1. British newspapers hoped Wal-Mart's entry would force local supermarkets to cut prices and profits. Competition fears prompted big falls Monday in the share prices of Tesco PLC and J. Sainsbury PLC, Britain's two largest supermarket chains ahead of third-placed Asda.


There was a tone of fascinated horror as the British press described life inside the 3,000-store U.S. empire and compared it with the reserved hush in most British shops.


Stories highlighted the often elderly "people greeters" who welcome customers and the mid-market Daily Mail said one of Wal-Mart's credos was "aggressive hospitality." It said staff was expected to sing the company song each morning.


"Teenagers are terrified of being made to wear the clothes, and nobody likes to admit they shop there, but everybody does," wrote a correspondent for The Times.


The bid by Wal-Mart, the world's largest retailer, follows its acquisitions in Germany, where it bought the Wertkauf chain in 1997 and the Spar Handels hypermarket chain last year, seeking to unlock new growth in Europe as the United States market becomes saturated.


Of all Britain's supermarket chains, Asda offers the most obvious fit to Wal-Mart. Its 229 British stores are generally 50 percent bigger than those of its competitors, it works on low margins and sells a wide range of discounted, general goods.


"We are dealing with Asda as a company that is very similar to ours in culture,'' Donald Soderquist, senior vice chairman of Wal-Mart, said Monday.


He acknowledged that the Kingfisher-Asda deal had spurred Wal-Mart's bid: "From time to time in the past, we've held talks, but not about an offer. The Kingfisher merger created the opportunity to look at it and become serious about it.''


Allan Leighton, Asda's chief executive, said: "The way we operate is based mainly on ideas we pinched from Wal-Mart. So from a colleague point of view, this is pretty much the perfect deal.''