Walmart Inc. is reportedly considering a private equity group's bid for a majority stake in Asda, its U.K. business.
Investors backed by TDR Capital are said to be the preferred bidders, beating out rival Apollo Global Management Inc., according to Sky News and Bloomberg News reports Monday. Bloomberg cited "people with knowledge of the matter." Sky News referred to its sources only as "insiders."
No agreement has been reached, they said.
The news organizations said the investor group also includes brothers Mohsin and Zuber Issa, the British owners of gas station firm EG Group.
A Walmart spokesman said Monday that it has no comment at this time.
The Bentonville-based retailer reached an agreement in 2018 with Asda's rival Sainsbury's PLC in a deal estimated to be worth about $9.4 billion based on currency exchange rates at the time. But regulators in Britain blocked the transaction in 2019, saying the sale would reduce competition, resulting in higher prices and less product assortment for shoppers.
Walmart has since given different messages about its plans for Asda.
Despite rumors that Walmart was considering an initial public stock offering for the unit, the company said in February that it was in talks with several potential buyers.
Then in April, Walmart put the bidding process on hold to allow Asda to focus on serving customers and supporting employees through the covid-19 pandemic. By July, however, the retailer said it was again exploring options to find a third-party investor.
Walmart is expected to retain a minority stake in Asda.
Asda, which has 631 stores throughout the U.K., has consistently been in third place in market share, according to research firm Kantar Worldpanel. Asda had 14.3% of the market in September, behind Sainsbury's 14.9% and market leader Tesco PLC with 26.6%.
All the top supermarket chains in the U.K. have lost market share over the past year as shoppers have increasingly turned to discounters such as Lidl and Aldi, according to Kantar.
Asda's online sales doubled in the second quarter over the previous year and store pickup of orders placed online quadrupled, Asda and Walmart reported in August. Same-store sales excluding fuel grew 3.8%. Sales at stores open at least a year are considered a key indicator of a retailer's health.
Net sales fell 5.3%, largely because of reduced demand for fuel as travel was curtailed. Walmart doesn't break out sales figures for its international markets.
Walmart acquired Asda in 1999 for about $10 billion in what was its largest transaction until May 2018, when it bought a majority stake in Indian e-commerce firm Flipkart Group for $16 billion.