Walmart is “seriously considering” a stock market flotation for Asda that is likely to value the business at more than £7bn after the failure of a planned merger between its British supermarket group and rival Sainsbury’s.
Judith McKenna, the chief executive of Walmart’s international businesses, told Asda staff on Tuesday: “While we are not rushing into anything, I want you to know that we are seriously considering a path to an initial public offering [IPO] – a public listing – to strengthen your long-term success.”
However, she added that preparations for a flotation could “take years” and in the meantime Walmart would ensure the UK chain had sufficient resources to realise its “potential for even greater things”.
McKenna said the US retailer did not have a “one size fits all” approach to its divisions around the world and that Asda should focus on improving its operations, including the implementation of £80m of price cuts to take on rivals such as Aldi and Lidl.
Analysts suggested talk of an IPO indicated that Walmart was struggling to find a plan B for its UK business, having failed to offload it into a merger with Sainsbury’s.
The £7.3bn deal was blocked by the UK’s competition watchdog, which ruled last month that a merger could mean less choice and higher prices for shoppers.
John Colley, an associate dean of Warwick Business School, said: “Asda is clearly not wanted by Walmart, which is occupied with greater challenges such as the threat of Amazon.
“The fact that an IPO is being considered suggests private equity firms are not interested at a price that will appeal to Walmart. However, an IPO also seems unlikely as future growth is likely to be limited.
“If the big four [British supermarkets] want to keep their market shares they will have to sharpen their prices in the face of rapidly expanding cost players Aldi and Lidl. The likelihood of a bleak future will not make Asda attractive to potential stock market investors.”
Union leaders said they had demanded an urgent meeting with Asda’s bosses to seek reassurances for staff about the future of the company.
Gary Carter, national officer of the GMB union, said: “GMB’s tens of thousands of Asda members have had enough uncertainty – they need to know that their futures are safe and secure.
“Walmart needs to remember they are playing with people’s lives while they try to make billions on the stock market.”
Asda is expected to reveal a further quarter of sales growth on Thursday but Roger Burnley, the chief executive of the retailer, has acknowledged it will be harder to sustain momentum without the Sainsbury’s deal.
He said new services were as important to customers as price and so the group would be testing ideas including same-day grocery deliveries and more use of technology such as scanning goods and paying via mobile phone in stores.
Burnley told staff: “We have a mountain to climb – continuing momentum into growth and ultimately, sustainability – but we can make a difference.”