Asda gets go-ahead for £778m takeover of Netto

ASDA has been given the green light for its £778m takeover of budget retailer Netto, ending months of uncertainty and paving the way for the creation of 1,500 jobs including 430 jobs in Yorkshire and Humber.

The Leeds-based group breathed a sigh of relief yesterday after the Office of Fair Trading said it would not refer its acquisition of Netto to the Competition Commission.

The acquisition will involve 147 Netto stores being converted to Asda supermarkets between May and the end of this year.

Hide Ad
Hide Ad

2011 is set to become the biggest single year of growth in Asda’s history with the acquisition of the 147 Netto stores being complemented by a further 21 store openings, bringing the total to 168 new stores.

Asda’s finance director Judith McKenna, who led the Netto deal, said: “We are really pleased to get the green light. It has been a long process over many months.”

She added that all Netto store colleagues will be retained and Asda will create an additional 1,500 jobs to bring the stores up to its service levels.

Following reports that supermarkets have made false claims about job creation programmes, she said: “It is very clear that these 1,500 posts are new jobs for new people.”

Hide Ad
Hide Ad

She praised the group’s Netto colleagues for their hard work during a difficult time.

“Netto colleagues have been very patient through a period of uncertainty. We are very grateful for the support and patience of all our colleagues.”

The new members of staff will also be needed to implement Asda’s ambitious plans to expand the stores’ product range from 1,800 to 10,000 enabling customers to complete a full weekly shop.

Ms McKenna said the five-fold increase in products will be made possible by increasing density on shelves. “It’s not a magic trick, it’s down to really careful planning and knowing exactly what the customer wants,” she said.

Hide Ad
Hide Ad

The 21 new store openings will include seven new Asda Superstores, four new Asda Livings and 10 new Asda Supermarkets.

It will also add five extensions to existing stores.

Asda entered into a contract last week to acquire six stores from Focus DIY, which will be converted into supermarkets subject to approvals and local planning consents.

The Office of Fair Trading ruled that Asda must sell 47 of the original 194-strong Netto portfolio in order to ensure shoppers benefit from competition in their local areas.

This prompted Asda to line up agreements to sell five stores to rival supermarket Bradford-based Morrisons, one to Iceland and 19 to independent chain Haldanes.

Hide Ad
Hide Ad

Some 14 Netto stores in Yorkshire and Humber will be sold to Morrisons, Iceland and Haldanes, which have said they will continue to run them as food stores.

This means Asda now needs to find buyers for the remaining 22 stores to meet the conditions laid down by the OFT.

The addition of the Netto stores to Asda’s regional portfolio will give the retailer 70 stores in Yorkshire and Humber. Asda already employs over 2,700 people at its national head office in Leeds.

Asda, which is owned by American retail giant Wal-Mart, agreed to buy Danish discount chain Netto’s 194 UK stores last May.

Hide Ad
Hide Ad

The acquisition will allow Asda, which typically runs large supermarkets in out-of-town locations, to greatly expand its portfolio of smaller stores.

Asda said the 147 Netto stores, which are mainly in the north of England and the Midlands, have an average size of 8,000 sq ft, whereas its typical store size is 38,000 sq ft.

The first converted Netto stores – in Wakefield, Worksop and Stainforth – will open in May.

Asda is planning a rolling programme of store conversions and each store will typically close for two weeks during the refurbishment.

Hide Ad
Hide Ad

Founded in the 1960s, Asda now has over 175,000 colleagues and 383 stores, including 26 Asda Living stores, 23 depots and eight recycling centres across the UK.

It serves over 18 million shoppers a week.

Supermarket’s price pledge

Asda has promised that its new shops will charge the same prices as its bigger stores.

A number of supermarkets charge more for goods in their smaller shops, cashing in on customers’ willingness to pay higher prices for convenience shopping.

Asda’s finance director Judith McKenna said: “The good news for shoppers here in Yorkshire is that there’ll be no premium to shop in one of our smaller stores.

“We’ll charge the same low prices you’ll find in any of our stores.

“Our plan is to bring Asda to more customers in many more communities in our heartland of Yorkshire and Humber.”