WMT

Walmart Halts Asda Sale Amid COVID-19 Outbreak

The coronavirus has infected more than 226,000 patients in the U.S. and more than 34,000 in the U.K., according to Johns Hopkins University.  

Hoarding supplies to wait out the pandemic has also apparently become a phenomenon in both countries, making it difficult for grocery stores to manage their supply chains to meet demand.  

An ASDA sign atop a store

Image source: Asda.

Struggling to deal with the hoarding phenomenon in both countries, Walmart (NYSE: WMT) is pausing its plans to sell the majority stake it owns in U.K. grocer Asda, according to reports from CNBC and Reuters.  

With demand for groceries at an all-time high, CNBC notes Asda has attracted "significant interest from private equity firms," which are offering Walmart prices for its stake that would value the entire business at $9 billion. This means that right now would probably be a great time for Walmart to try to extricate itself from the business. It acquired its stake in Asda back in 1999 for a price that would have been nearly $11 billion back then. Walmart would probably still take a loss on the sale, but if today's hoarding-induced sales are an aberration from the longer-term trend of declining sales at Asda -- as they probably are -- then now would be a good time to exit.  

Instead of getting while the getting is good, however, Walmart is hanging onto its stake in Asda for the time being, so it can "direct full attention to managing the business as the coronavirus pandemic creates massive spikes in demand for groceries," CNBC reports.

10 stocks we like better than Walmart Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of March 18, 2020

 

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.