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Asda reaches next milestone in purchase of Netto foodstores Ltd from Dansk Supermarked A/S

Confirms transaction will create around 1,000 jobs across England and Wales

  • All Asda smaller stores to be called “Asda Supermarket” with division of 26 smaller stores set to grow to over 170 in 2011.

  • Asda confirms all acquired UK Netto stores will trade under an Asda fascia by late summer 2011 as planned.

  • Agreement still subject to final regulatory approvals

Asda today acknowledged the Office of Fair Trading’s announcement that it is minded to clear its agreement with Dansk Supermarked A/S to purchase its fully‐owned subsidiary Netto Foodstores Limited, subject to Asda complying with certain conditions.

The OFT’s announcement, paves the way for Asda to finalise its agreement with Dansk with a requirement that Asda agrees to sell 47 Netto stores, which is at the high end of its expectations. Asda is confident that it can meet these obligations and expects to complete the conversion of the Netto stores by late summer 2011 as planned.

When the deal completes, the key elements of the plan to transform Netto’s UK stores will be to give customers access to a significantly expanded range of products at the same low Asda prices available at its other stores. Specific changes include:

Converted Stores

  • After meeting the OFT’s requirement to sell stores, around 1,000 jobs will be created in the stores it converts to trade under the Asda Supermarket name. On average, there will be up to double the number of colleagues employed in a Netto converted to Asda. All existing Netto store colleagues in the acquired stores will be retained with the additional posts filled through a combination of new recruits and colleagues from existing Asda stores.
  • As a consequence of the new regulatory timetable, Asda is planning to open its first pilot conversions in the first quarter of 2011, rather than before Christmas. This is a pragmatic business decision allowing Asda and Netto to concentrate on trading in the busiest period of the year.
  • In stores converted from a Netto to an Asda Supermarket, customers can expect to see some significant changes:

Range – Customers can expect to see a much broader range of products. In an average size Netto, the number of products will rise from an average 1,800 today up to around 10,000, with up to 12,000 in the larger stores. New choices for Netto customers will include a compact range of mens, women and kids clothing, integrated into the health and beauty aisle

Price – A Netto that becomes an Asda Supermarket will allow customers to save on a broader shopping basket. Unlike some other small store operators, customers will not pay a premium for the convenience of shopping in a smaller Asda store ‐ the prices in its supermarkets will be the same as those available in all its other stores

Quality – Netto stores converted to Asda will have a full range of Asda and branded food items, including “Chosen by You”, the new Asda Brand endorsed by over 40,000 customers in 200,000 taste tests in 45 towns across the UK. Local products such as sausages and ice‐cream from Asda’s award‐winning local sourcing hubs will be made available in the right stores;

Service – Asda will accept credit cards, open longer hours, and have more colleagues on hand to serve customers. Its in store collect service, offering the non food range of a 100ksq ft store, will be rolled out to the majority of Nettos that become an Asda Supermarket.

Stores To Be Sold

  • Asda has already begun discussions with prospective buyers and is confident that it can complete the sale of those stores.

  • In the interim, these stores will continue to trade under the Netto name with existing colleagues whose roles will be fully protected in the interim. Asda will work quickly to provide certainty to those colleagues in these stores as it arranges for a sale.

Distribution Centres

  • Asda envisages converting Netto’s South Elmsall distribution centre into an ambient cross‐dock centre within the Asda distribution network, and expects to accommodate the majority of colleagues at that location within the new centre or, subject to consultation, at other Asda depots close by in Yorkshire.

  • Asda envisages closing Netto’s other depot at Daventry in 2011, but subject to consultation, expects to be able to accommodate the majority of the colleagues through regular vacancies at its four other DCs at nearby Magna Park, Lutterworth. Between them, these depots already employ around 2,500 colleagues. Asda will also be introducing additional distribution capacity in the North West to support the converted stores.

Store Service Centre

  • The Netto Store Service Centre (SSC) in South Elmsall will continue to support unconverted Netto stores during much of the 2011 store conversion process. As that conversion progresses, Asda may look to migrate some of the SSC’s functions into Asda.

  • Commenting on the agreement, Asda’s president and chief executive Andy Clarke said: “Today’s OFT announcement paves the way for us to bring Asda to thousands of people in England and Wales and create a significant number of new jobs in an increasingly tough economy.”

Asda’s chief financial officer Judith McKenna said: “We’ve already learned so much from Netto colleagues and I appreciate their hard work and commitment. I’m looking forward to continuing to work together to ensure we make the transition to Asda a success and putting into practice what we’ve learned. I continue to be excited at what we can achieve together.”

Posted in Press Centre on 23 September 2010