TAKEOVER PROPOSAL

Takeover Proposal

Takeover Proposal

Introduction

On 14 June 1999, US retailer Wal-Mart launched a takeover bid for the UK retail chain Asda. Asda had previously been in discussions to merge with the Kingfisher group, but the Wal-Mart offer caused that merger proposal to fail. In the last week of July, the deal was completed and Wal-Mart took over Asda. In the six weeks from initial announcement to final completion, the Wal-Mart deal and its ramifications generated extensive comment in newspapers, trade publications, and other periodicals. Using primarily the Financial Times's (ft.com) Global Archive of over 3,000 publications, the nature of that commentary is examined here. It is shown that there exist, in commentaries on the deal, ambiguities and seemingly contradictory imagery and that alternative perceptions of retailing and retailers can coexist in the worlds of journalism and business analysis. For simplicity, citations from publications are shortened to an abbreviated title (see Table I for interpretation) followed by their day/month of publication.

Analysis

The issue of scale, and related matters of merchandise provision, were also perhaps a point of contrast between the two parties to the deal:

Wal-Mart is used to operating from significantly larger outlets than the typical Asda … Wal-Mart's expertise lies in selling a wide range of general merchandise (FT 15/6). Yet, once the size aspect had been established, some further characteristics were also reported. Wal-Mart is “the US giant with the customer-first reputation” (MoS 26/7) which is “famed for its discounting” (Gdn. 18/6). The company operates a “pile 'em high, sell 'em cheap format” (Ind. 26/6). “You can never fight Wal-Mart on price”, Mike Godliman of Verdict is quoted as saying (FT 15/6). Wal-Mart is the “US trend setter” (FT 29/6) which was also expanding its areas of activity by moving into banking (Tel. 30/6; FT 30/6) and online book retailing (FT 2/7). Its reach is deceptive; it seems: “ … although nobody admits they shop at Wal-Mart, everyone does. The reason they shop there is because it is absurdly cheap …”, but that is not just because of size; it is also because of features like state-of-the-art computer usage (Sco. 1/7), while “behind the scenes it is a very aggressive organisation, with huge leverage with suppliers” (Tim. 22/7). According to Retail Intelligence, “The American chain specializes in huge stores on the periphery of towns” (Gdn. 28/6); moreover, these “Wal-Mart supercenters are wreaking havoc on the US supermarket industry” (HFN 21/6). 'Stomp the comp' is the attitude to opposition of a company that represents 'the model of American corporate greed' said a Union representative (SCMP 27/6). While it may seem a little unnecessary to pose the question “Who are Wal-Mart?” in a major retail journal, the likelihood is that few UK consumers, for example, would have had much of a perception of the US company bidding to take over Asda. Thus for many reading the UK press coverage of the deal, the portrayals of Wal-Mart in various sections of the press would be a primary source from which to develop an image ...