Subject:  Wal-Mart seen shopping for smaller British deal |
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Date Posted: 13:48:23 09/26/03 Fri
Wal-Mart seen shopping for smaller British deal
Reuters, 09.26.03, 3:43 PM ET
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European Union
By Brad Dorfman
CHICAGO, Sept 26 (Reuters) - Wal-Mart Stores Inc. (nyse: WMT - news - people) could try to buy a smaller British grocery business now that its bid for highly sought Safeway Plc has been squashed by the British government, analysts said on Friday.
"At the moment in the United Kingdom, the only way you can expand as a retailer is through acquisition," said Richard Hull, head of retail in Britain for consulting firm Cap Gemini Ernst & Young.
Safeway was desirable for Wal-Mart and others because it is difficult for retailers to find space to build stores from scratch. They "were regarding this as relatively critical for their expansion in the United Kingdom," Hull added.
Britain, through the Asda chain, accounted for about 43 percent of Wal-Mart's international sales last year, though only 7.5 percent of total company sales, Emme Kozloff, retail analyst at Sanford Bernstein, said earlier this year.
Hull said Wal-Mart could now turn its sights to smaller retailers like Somerfield Plc and Big Food Group Plc , which owns the Iceland chain, as possible targets.
A spokesman for Wal-Mart, the world's largest retailer, could not be reached for comment on Friday.
On Friday, the British government ruled that Wal-Mart, Tesco Plc and J Sainsbury Plc could not buy Safeway because such an acquisition would reduce competition. Wal-Mart's Asda is the No. 2 British grocer.
The ruling cleared the way for family-run William Morrison Supermarkets Plc to buy Safeway.
"I think Wal-Mart clearly had a plan in place for U.K. expansion prior to this event," Jeff Klinefelter, retail analyst at U.S. Bancorp Piper Jaffray, said of the Safeway sale. "So I don't think this prohibits them from expanding. It slows down their expansion plans."
Wal-Mart shares were up 5 cents at $56.94 on Friday afternoon on the New York Stock Exchange.
footnote http://www.forbes.com/markets/newswire/2003/09/26/rtr1093000.html
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