National Sunday newspaper reported that Asda, owned by US parent Walmart, is in the “early stages” of preparing an offer for B&M which employs hundreds of people at its Speke HQ. Tony McDonough reports
Supermarket giant Asda is lining up a £4.4bn bid for Liverpool-based discount retailer B&M, according to a media report on Sunday – sending B&M’s shares up 4% on Monday morning.
The Sunday Times reported that Asda, owned by US parent Walmart, is in the “early stages” of preparing an offer for B&M which employs hundreds of people at its headquarters and main distribution centre in Speke.
B&M operates more than 540 stores across the country, including over two dozen in the Liverpool city region employing hundreds more people.
It is in the process of opening a new outlet in the Project Jennifer scheme in Great Homer Street, creating 60 jobs.
Neither Asda nor B&M has so far offered any comment on the story.
B&M began with a single store in Blackpool in 1976. In 2005 Manchester brothers Simon and Bobby Arora, who ran a successful wholesale business, bought the chain from Private Equity firm Phildrew Ventures.
At that time it was still based in Blackpool and its 20 stores generated annual sales of £65m.
The Arora’s later relocated the business to Speke and now in 2016/17 annual revenues were up almost 20% to more than £2.4bn with pre-tax profits soaring to £190.1m.
In 2012 private equity house Clayton Dubilier & Rice bought a 60% stake in the business and three years ago it was floated on the stock exchange with a value of £2.7bn. The Arora family retains a 15% stake.
B&M, whose chairman is Liverpool-born former Tesco chief executive Sir Terry Leahy, was valued at £3.4bn when markets closed before the reports of the bid last Friday.
Based on the usual takeover premium Asda would have to stump up at least £4.4bn to mount a successful bid for the company.
Asda has been through a tough trading period, suffering 11 consecutive quarters of falling sales.
It has been hit hard by the rise of German discounters Aldi and Lidl and acquiring B&M would offer a powerful weapon in the battle to win back customers in the value retail market.