Wal-Mart deal worth 80m to farmers

16 June 1999

Wal-Mart deal worth 80m to farmers

by FWi staff

FARMERS will benefit to the tune of 80m from the buy-out of the Asda supermarket chain by the US retail giant Walmart, Asda has claimed.

But some livestock producers are worried they could suffer after Walmart made an agreed 6.7bn ($10.8bn) cash bid for the UKs third largest supermarket.

Asda shares soared 20% on the news of Wal-Marts recommended cash offer of 220p per share and closed yesterday (Tuesday) just below at 216.25p each.

Many analysts predict the Wal-Mart deal will result in a revolution in the UK retail sector, with rival supermarkets forced into price wars in an effort to win customers.

Although shares in Tesco yesterday remained steady, shares in Sainsburys fell 8p to 365.5p as Wal-Mart amassed an initial 11.5% stake in Asda.

The fear among farmers is that a price war as a result of the Wal-Mart deal could further depress the beef and sheep sectors, already suffering from a year-long slump.

Many livestock producers see Asda as the British supermarket most sympathetic to their plight and they Asda to continue supporting them in their hour of need.

In recent months, Asda committed 400m over four years to a “Buy British” campaign during which it will buy from British farmers rather than from abroad.

Supermarket bosses have even allowed a handful of farmers in north-west England to use an Asda car-park as a farmers market where they can sell their farm produce.

But Wal-Mart has a reputation in the US for being much cheaper than its shopping mall rivals when it comes to food with prices often lower by as much as 17%.

British customers too are expected to enjoy huge discounts of 10-15% on their shopping bill when the Wal-Mart deal is completed, say some reports.

Nevertheless, Asdas support of British farmers will continue, an Asda spokeswoman told FWi today.

The “Buy British” campaign will be extended by 80m as a direct result of the Wal-Mart deal, the spokeswoman confirmed.