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Asda said yesterday it had reached an agreement with Dansk Supermarked A/S to purchase Dansk’s fully owned subsidiary, Netto Foodstores, Ltd. The deal, which remains subject to regulatory approval from the Office of Fair Trading, will enable Asda, a wholly owned subsidiary of Wal-Mart Stores, Inc., to convert Netto’s U.K. locations into Asda stores and integrate them into its new supermarkets division for units under 25,000 square feet.
The purchase price for the 193 stores was 778 million pounds, or USD $1.1 billion, according to various press reports. Asda said that the transaction was expected to close this summer, and that the Netto store overhaul should be complete by mid-2011. Until official approval is received, all U.K. Netto stores will operate under existing management.
Established in the United Kingdom in 1990, Netto operates 193 stores averaging 8,000 square feet each. The chain is the market leader in its home country of Denmark and one of the fastest-growing discounters in Germany, Poland and Sweden.
“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,” said Asda president and CEO Andy Clarke. “The creation of new in-store jobs in a tough economy will also be a welcome boost in scores of communities across the U.K.”
The addition of new items means that customers will be able to complete a full weekly shop at the converted Netto stores, each of which will employ up to twice as many associates as the current locations.
“As a major-league player, Asda is the ideal purchaser of our U.K. business,” noted Netto managing director Claus Juel-Jensen. “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.”
Asda said that the acquisition of all of Netto’s U.K. stores is a key strategic building block in satisfying demand for the retailer in more communities throughout that country, as well as underscoring its commitment to building smaller stores.
Founded in the 1960s, Leeds, Yorkshire-based Asda has over 170,000 employees in 374 stores, including 25 ASDA Living stores, 23 depots and eight recycling centers, across the United Kingdom. Employing over 2.0 million associates worldwide, Walmart serves customers and members more than 200 million times per week at more than 8,400 retail units under 55 different banners in 15 countries.