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B&M shares jump on talk of takeover approach from Asda

PUBLISHED: 10:06 24 July 2017 | UPDATED: 10:06 24 July 2017

Asda is reported to be considering a takeover bid for B&M.
Pictures B&M

Asda is reported to be considering a takeover bid for B&M. Pictures B&M

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Shares in B&M rose sharply today following weekend reports that supermarket giant Asda is mulling over a £4.4bn takeover of the discount retailer.

Asda could follow Sainsbury's and Tesco into the consolidation currently taking place in the retail sector.
Picture: Rui Vieira/PA WireAsda could follow Sainsbury's and Tesco into the consolidation currently taking place in the retail sector. Picture: Rui Vieira/PA Wire

Asda, owned by United States group Walmart, is exploring a bid for B&M amid a flurry of consolidation in the supermarket sector, according to the Sunday Times.

In response, B&M shares were up nearly 5% at 357p in early trading.

The chain is owned by the billionaire Arora brothers, who have built B&M up to a 500-plus store retail giant since taking control of the firm in 2004.

Acquiring the retailer would give Asda access to a new network of shops through which to distribute its products, including the George clothing range.

Clive Black, analyst at Shore Capital, said: “B&M would bring great capability in general merchandise value retailing for Asda, with its strong range, authority, pricing and space growth, whilst providing George, Asda’s excellent apparel brand, the scope for space growth in largely complementary locations.

“B&M is also increasingly effective in grocery, we should add. Cost synergies would be potentially evident in central overheads, sourcing and logistics.”

A deal would also release pressure on Asda’s core supermarket business, which has seen years of sales declines as its competitors have stolen a march on it.

Tesco is attempting a £3.7bn merger with Booker and a mooted attempt by Sainsbury’s to acquire Nisa is also thought to be on the cards, barely a year after it took over Argos.

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