Asda casts slide-rule over variety store group B&M

Asda, the Walmart-owned grocery and general merchandise giant, is in the initial stages of considering a takeover, according to The Sunday Times.

Ownership of B&M, founded by the Arora brothers and chaired by former Tesco boss Sir Terry Leahy, would open up a new sales channel for Asda – especially its George clothing range – and reduce its dependence on food.

Any deal would come as UK grocery undergoes transformation.

Sainsbury’s bought Home Retail-owned Argos for £1.1bn last year, while Tesco aims to acquire wholesaler and retailer Booker for £3.7bn.

Rival Morrisons has struck a distribution deal with online powerhouse Amazon.

Asda, winded by discounters Aldi and Lidl, has suffered 11 consecutive quarters of underlying sales falls.

Potential deal

B&M has about 540 UK branches and stocks everything from food to garden furniture, and before the story broke was valued at £3.4bn.

According to The Sunday Times, a standard bid premium would take B&M’s value to at least £4.4bn.

Asda declined to comment to The Sunday Times, and B&M could not be immediately reached for comment.

However this morning The Telegraph reported that “senior Asda sources said that there was no truth to speculation that it was mulling a takeover of B&M”.

Two weeks ago B&M said sales had rocketed during what boss Simon Arora described as its strongest first quarter in three years.

Sales soared 18.3% at actual currency rates and 17.2% on a constant basis to £656m.

B&M attributed the growth to strength in grocery, good weather and the timing of Easter.

Arora said: “In these uncertain times, and with inflation returning to the UK market, more and more shoppers are actively seeking out value in our stores and that means our business is strongly positioned to do well and continue its rapid growth.”