Asda told to dispose of Netto properties

Posted by Kim Newbold on 24th Sep 10

Supermarket chain Asda has been told by the Office of Fair Trading that it will have to sell a total of 47 Netto stores in order to stay within the competition watchdog’s guidelines. The figure produced by the OFT is higher than the grocer expected. In May, Asda struck a deal worth £778 million with Dansk Supermarket in Denmark to acquire the Netto stores.

The OFT told Asda the disposals would be necessary because it was worried that in areas where both stores operated, competition would be significantly reduced. Once Asda finds buyers for the Netto properties the deals will have to be approved by the OFT.

Asda said that the number of stores it was being told to get rid of was at the higher end of expectations but added that it was sure it would be able to comply. Although the grocer still plans to complete the conversion of its Netto properties by the middle of 2011, it will not have its pilot store ready before Christmas as planned. This is due to the fact the OFT took three weeks longer than expected in preparing its decision.

Asda, owned by US retail giants Wal-Mart, made the decision to buy the Netto properties in an attempt to counter its dwindling sales. It also wants to make sure it does not slip from its position as the UK’s second largest supermarket chain.

Shore Capital analyst, Clive Black, said the OFT’s decision would be disappointing for Asda, but added that the grocer should have no trouble in disposing of the food retail properties as demand is currently high.

"Just wish to say your article is as astounding. The clarity on your post is simply cool and i could think you're a professional in this subject. Well with your permission allow me to take hold of your RSS feed to stay updated with forthcoming post. Thanks a million and please continue the rewarding work."

Added by home shopping europe on 9th May 12