Asda this week announced it has reached a deal with Dansk Supermarked A/S to purchase its Netto Foodstores discount chain in the UK for £778 million on a cash and debt free basis.
The transaction, which remains subject to regulatory approval, will enable the Wal-Mart-owned retailer to convert Netto’s UK locations into Asda stores and integrate them into its new supermarkets division for units smaller than 25,000sqft.
In a statement, Asda said that it expected to finalise the transaction after approval from the Office of Fair Trading later this summer and to complete the refurbishment of the Netto stores to trade under an Asda fascia by the middle of 2011.
Until official approval is granted, all Netto stores in the UK will continue operations as usual under existing management.
Netto was established in the UK in 1990 and operates 193 stores in the country at an average 8000sqft. The chain is the market leader in Denmark and among the fastest-growing discounters in Germany, Poland and Sweden.
Asda’s president and chief executive Andy Clarke said: “We very much look forward to welcoming Netto’s colleagues into our business and joining our team.
“Customers will benefit from low prices on a significantly broader range of quality products, complemented by the wide range of services we offer in all our smaller stores.
“The creation of new in-store jobs in a tough economy will also be a welcome boost in scores of communities across the UK.”
Dansk Supermarked, chief executive Erling Jensen, said: “Netto UK has been profitable and was appointed Discounter of the Year in 2009 in the UK.
"We have substantial opportunities for growth in Scandinavia and northern Europe and believe that the time has come to focus our efforts on the development of our business in these countries. As a major league player, Asda is an ideal purchaser of our UK business.”
“Dansk Supermarked will continue to invest in Netto and will continue to have a strong focus on growing the business in line with the strategy as set out by the board and supported by our owners who see retail as a well-performing and core business area.”
Asda said its move to acquire Netto’s UK stores was a “key strategic building block” in satisfying demand for the retailer in a much broader range of communities across the UK and underlined its commitment to its smaller stores division.
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