British Stocks Jump on Work of Wal-Mart Meeting

The price of British supermarket shares jumped in heavy trading April 22 after verification from Downing Street that executives from Bentonville-based Wal-Mart Stores Inc. had met with British Prime Minister Tony Blair in March.

The stocks increased on speculation that Wal-Mart might be a counter-bidder for ASDA, the United Kingdom’s third-largest grocery chain. ASDA agreed in mid-April to merge with Kingfisher, the UK’s sixth largest retailer. ASDA shares traded almost 3 percent higher after the announcement.

Asma Usmani, a retail analyst with Edward D. Jones & Co. in St. Louis, says the United Kingdom is normally a jumping off point for American companies that are looking to branch into Europe. But Wal-Mart already has stores in Germany, and the hotly competitive UK retail industry wouldn’t appear to be the most appealing climate for a Wal-Mart invasion.

Usmani, a native of Manchester, England, says Wal-Mart may be looking to buy ASDA just to establish a presence in the UK. Wal-Mart is in a unique position to bring the first discount stores to England, where grocery stores sell only groceries. But space for new stores is limited there, so purchasing an existing company would be necessary for expansion, Usmani says.

Wal-Mart executives at the Blair meeting included Bob Martin, Wal-Mart’s head of international operations. With annual sales of about $140 billion, Wal-Mart has announced plans to expand globally.

Safeway stock rose by 1.9 percent on the London market after The Daily Telegraph carried a report that Safeway executives were in the United States talking to Wal-Mart.

Safeway’s stock continued to climb the next day – 5.4 percent higher April 23 amid rumors then that the bid would be coming from the French supermarket company Carrefour.