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Lone Star Funds quits bidding war to snap up Asda, two suitors left

Apollo Global Management and TDR Capital are two other private equity groups seeking to buy a large stake in the grocer

J Sainsbury PLC - Lone Star Funds quits bidding war to snap up Asda, two suitors left

Private equity Lone Star Funds has dropped out the £6.5bn bidding war to snap up grocery chain Asda.

Apollo Global Management and TDR Capital are two other private equity groups thought to be looking to buy a large stake in Asda, which parent Walmart has put up for sale.

READ: Asda's private equity suitors battle for 'air rights' above supermarkets - reports

TDR are understood to be cooperating with the billionaire Issa brothers, who are behind petrol station retailer EG Group.

However, the deal proposed by TDR may be less attractive to Asda for a potentially lengthy competition enquiry, according to The Telegraph.

The UK watchdog previously halted a proposed merger of Sainsbury’s and Asda.

Lone Star reportedly quite because it couldn’t match the price offered by Apollo, which would work on expand the grocer’s online operations.

The US firm was seemingly just interested in its ‘air rights’, the area directly above a property, which the owner has the right to develop.

Already in the UK supermarket sector, Sainsbury’s (LON:SBRY) netted a £95mln profit from redeveloping two stores in south London in partnership with Barratt Developments PLC (LON:BDEV), while Tesco (LON:TSCO) has developed mixed-use buildings on top of several stores in the capital as part of a plan to potentially generate £400mln from its air rights.

One property sector analyst calculated that 150,000 homes in London could be built above or alongside stores.

Quick facts: J Sainsbury PLC

Price: 201.6 GBX

LSE:SBRY
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Market Cap: £4.48 billion
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