By James Wells
SYDNEY: A report published last week that claimed Woolworths could be taken over by the world’s largest retailer, Wal-Mart, has received a twist with a the same newspaper now claiming the American company already has a share in Australia’s largest retailer.
The speculation of an impending local acquisition is believed to be connected to two unconnected events – the departure of Wal-Mart from the German market in late July and a recent visit by ASDA managing director, Andy Bond as a guest of Woolworths chief, Roger Corbett. The UK-based ASDA chain is owned by Wal-Mart.
An article published last week in the Sydney Morning Herald (SMH) titled ‘Wal-Mart eyes Australia’ claimed the $A240 billion retailer was close to making its first acquisition in Australia.
The SMH article quoted a report sourced from the UK’s Sunday Telegraph following Wal-Mart’ decision to sell its 85 German stores last month to competitor – Metro. The decision to leave the German market is expected to contribute to a $US 1 billion pre-tax loss for the second quarter of the financial year.
Today, the SMH claimed that Wal-Mart already holds a stake in Woolworths. The newspaper also drew a link between
Wal-Mart’s slogan of “Always low prices” and Woolworth’s “Everyday low prices” as well as training and personnel exchanges between the two retailers.
Corbett told the SMH that a bid for Woolworths by Wal-Mart is unlikely as it would cost a significant premium in excess of the current share price which has a valuation of 23 times earnings.
Analysts believe that Coles, which is said to have modeled its business on the UK supermarket chain – Tesco, is a more realistic target from an overseas company.
Last month, Coles CEO John Fletcher hinted at a Wal-Mart style retail offering which would resemble a Kmart and Coles without the wall in between.
Last week Fletcher announced that the Kmart and Bi-Lo brands will disappear over the next two years as all 2,200 supermarket, liquor, fuel, convenience and super store will be named Coles and feature a new logo and offer an “everyday needs” profile.