Newswatch - ASDA takeover doubts
Kingfisher shareholders are expected to approve the retail giant’s proposed takeover of Asda at an extraordinary general meeting next Tuesday.
But Asda shareholders could be getting cold feet. Fund managers and other investors have indicated concerns that the share-swap deal undervalued the supermarket giant.
‘The offer does appear to have put a lowish value on Asda,’ said one last week. The fears were fuelled as Asda announced annual results showing strong sales and profit growth.
Doubts were also expressed about the deal by a report from Deutsche Bank, which advised investors to swap their Kingfisher shares for those in other retailers.
Kingfisher has taken the unusual step of moving to kill off criticism by writing to shareholders of both companies extolling the advantages of the deal. Asda shareholders are being asked to vote by post before 18 June. Both companies said they were confident their shareholders would approve the deal. Asda said: ‘We are happy that people will vote in favour of the deal. This is a merger being done on a share-for-share basis so there is no price as such.’
As predicted in Accountancy Age, Ernst & Young is likely to lose out as Kingfisher’s auditor PricewaterhouseCoopers moves to take on the merged group, which will be worth over £17bn. A spokesman last week confirmed this was likely to be the case.
Kingfisher finance chief Philip Rowley has been named as FD of the combined group. The future of Asda FD Tony De Nunzio remains uncertain.