Yorkshire-based store chain 'eyeing up retailer'

Leeds-based Asda, which is owned by US food giant Wal-Mart, is thought to be eyeing up the Argos and Homebase owner Home Retail Group in an attempt to snatch a greater share of the general merchandise market.

According to reports, the firm considered a number of other firms based in the high street and out-of-town shopping parks.

The supermarket chain is also understood to have "weighed up" budget clothing chain New Look.

Asda, which is believed to have received approval for the move from its US parent, would probably attract attention from regulators if it bought a large rival.

According to the report, a source said Asda was poised for a "major acquisition".

"Wal-Mart has realised it's the only way they can grow and compete with Tesco on the same footing in the UK," the source said.

An Asda spokesman said yesterday: "We cannot comment on market speculation."

Recent industry figures from Kantar Worldpanel showed Asda was the only one of the "big four" to see a fall in its share of the UK grocery market in the 12 weeks to March 21.

The supermarket slipped from 17.3 per cent to 17.1 per cent over this period, partly as a result of strong comparatives from a year earlier, when its sales were growing at more than eight per cent.

Meanwhile, Tesco moved higher in the same period as it continued to benefit from aggressive Clubcard loyalty bonuses – up from a share of 30.1 per cent to 30.3 per cent.

The grocery sector has faced slowing growth in takings this year, figures suggesting that the rate had slumped to its lowest level since the summer of 2007 amid sharp falls in food price inflation.

Asda, which reported a six per cent rise in like-for-like sales for 2009, plans to open more smaller shops this year. The firm has a total of 371 stores, 23 depots and 24 Asda Living outlets across the UK.

Asda can trace its roots back to the West Riding Dairy Farmers, who joined together under the banner of Hindell's Dairy Farmers, in the early 20th century.

The company diversified in 1949 to become the Associated Dairies and Farm Stores.

In 1965, entrepreneurs Peter and Fred Asquith, who were originally butchers based in Knottingley, West Yorkshire, joined together with Associated Dairies to form Asda. In 1999 Asda was taken over by Wal-Mart.