Apollo Global Management is emerging as the leading contender in the race to acquire Asda, the UK supermarket chain owned by Walmart. Rival private equity group, Lone Star, has dropped out of the bidding process after failing to meet Walmart’s price expectations. This leaves Apollo and TDR Capital as the remaining potential buyers, and it is anticipated that a deal will be announced by the end of the month.

Apollo is reportedly collaborating with retail expert Rob Templeman, the former CEO of Debenhams, to strengthen its bid. On the other hand, TDR Capital’s offer is supported by the billionaire Issa brothers, who own EG Group, a forecourt operator. However, there is a major obstacle to overcome in finalizing the deal, as Asda is currently embroiled in an ongoing dispute regarding equal pay. The supermarket is facing the largest equal pay claim in the UK, which is currently under consideration by the Supreme Court. The potential liabilities resulting from the outcome of this case are a cause for concern for the bidders.

Despite the challenges, Asda managed to achieve a sales boost in the first quarter of the year as consumers stockpiled supplies in preparation for the Covid-19 lockdown. Like-for-like sales, excluding petrol, saw a growth of 3.5%. However, there was a decrease in demand for clothing and an increase in staffing costs. Asda currently holds approximately 15% of the UK’s grocery market share and was previously valued at £7 billion when a proposed merger with Sainsbury’s was blocked by the Competition and Markets Authority due to concerns of potential price increases.

1. Apollo Global Management
2. TDR Capital