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Walmart announced on Friday that it is selling a majority stake in its UK-based Asda Group, to a consortium that includes buyout firm TDR Capital and the billionaire Issa brothers, Mohsin and Zuber, for $8.8 billion.

Walmart acquired Asda in 1999 for $10.8 billion, hoping to be able to disrupt the British supermarket industry.

Now, Bloomberg writes, "Walmart hailed the deal as creating the 'right ownership structure for Asda, whilst bringing a new entrepreneurial flair' to U.K. retailing … The self-made Issas are touted by Walmart as the secret sauce of the deal, who will recharge a business that has seen its market share fall to 14.5% from 17% in the past five years, based on data from Kantar, a research and consulting group."

However, the story suggests, "the buyers will face the same challenge that frustrated Walmart: Finding a winning strategy in arguably the world’s most competitive grocery market at a time when the way people shop is changing and the pandemic and Brexit are making food security more vital than ever."

One possible strategy would be to extend the Asda on the Move convenience format to the EG Group's gas station fleet owned by the Issa brothers.

As for Walmart, the Wall Street Journal writes, "In recent years, Walmart has shifted its focus toward building a larger online and digital business to rival Inc., selling struggling international businesses and favoring regions where executives believe there is potential for growth."  In other words, bail out of the UK and Brazil, and invest heavily in India.

Walmart will keep a board seat on the company and will continue supplying the retailer.

KC's View:

We have a story below about how Tesco has been successfully competing against Aldi, but one of the more revealing comments in the piece is how Asda has almost become an afterthought.  Which says a lot.

I'm a little surprised by the "new entrepreneurial flair" remark, if only because it strikes me as a concession that this is something that Walmart can't bring to the table.  It is probably true, but is it something that Walmart really wants to admit, seeing as entrepreneurial flair is something that retailers of every size ought to aspire to?

In a broader sense, I wonder if this says something about the world and how retailers like Walmart view it.  There are old economies and new economies, and it probably is fair to say that Walmart views the UK as an old economy and places like India as a new economy.

What this makes me wonder is, what is the US?  And how do we avoid slipping into the realm of old economies?