Asda buys Netto for £778m

The move demonstrates the UK supermarket chain’s commitment to its smaller store format, with plans to incorporate 193 Netto stores into its portfolio.

Asda buys Netto for £778m

Asda yesterday announced that it had reached an agreement with Dansk Supermarked A/S to purchase Netto Foodstores Ltd for £778m.

The sale, which remains subject to regulatory approval, will see Asda convert all of Netto’s UK locations into Asda stores and integrate them into its new supermarkets division for units smaller than 25,000sq ft.

Asda expects the transaction, which will see it close the gap between rival chain Tesco, to finalise after approval from the Office of Fair Trading later this summer. It also anticipates refurbishment f the Netto stores to trade under an Asda fascia to be complete by the middle of next year. Until official approval is granted, Asda stressed that all Netto stores in the UK will continue operations as usual under existing management.

Commenting on the agreement, Asda’s newly-appointed president and chief executive Andy Clarke said: “We very much look forward to welcoming Netto’s colleagues into our business and joining our team. Customers will benefit from low prices on a significantly broader range of quality products, complemented by the wide range of services we offer in all our smaller stores.”

Last month former Asda chief executive Andy Bond, who now was appointed part-time chairman of the company, set out a series of key targets for the chain, including overtaking Tesco to become ‘number one’ in non-food retailing in the UK and opening 100 smaller format supermarkets.

Netto, which was established in the UK in 1990, operates 193 stores across the country, at an average 8,000sq ft. The discount chain, which once dubbed itself as “the most competitive non-food retailer in the UK”, offers a range of housewares and decorative goods and last year introduced a limited edition garden collection including mowers, strimmers, hose and sprinkler systems, a gazebo and garden sundries.

Asda described Netto as “a strategic building block in satisfying demand for the retailer in a much broader range off communities across the UK and underlines Asda’s commitment to its smaller store division”.

Netto’s md Claus Juel-Jensen explained, that while he was proud of the success of Netto, which won ‘Discounter of the Year’ in 2009, the company plans to focus its efforts on the development of its business in Scandinavia and Northern Europe, where it sees substantial growth opportunities. He added: “As a major league player, Asda is the ideal purchaser of our UK business.”

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