Asda and Kingfisher in multi-billion pound merger

- UK retails giants Asda and Kingfisher have announced that they are in discussions which are expected to result in a merger of the two companies.

- UK retails giants Asda and Kingfisher have announced that they are in discussions which are expected to result in a merger of the two companies.

The joining of Asda, the UK's third largest supermarket group, with the owner of B&Q, Woolworths, Comet and Superdrug would create a £12 billion company.

The terms of the proposed merger would involve an exchange of 0.2263 Kingfisher shares for each Asda share. This would give Kingfisher the upper hand in the new operation, allocating to its shareholders 66.33 per cent of the enlarged company's equity. Asda shareholders would take the remaining third.

Based on Kingfisher's closing share price yesterday of 875p, this would result in an implied price for Asda shares of 198p. The terms represent a premium of some 20% based on the average share prices of both companies over the last month.

Sir Geoffrey Mulcahy, chief executive of Kingfisher, would be chief executive of the new group and Allan Leighton, chief executive of Asda, would be deputy chief executive of the group and chief executive of the enlarged food and general merchandise division -- comprising mainly Asda, Woolworths and Superdrug.

Sir John Banham, Kingfisher's non-executive chairman, would be non-executive chairman of the new group. Archie Norman, chairman of Asda, would become non-executive deputy chairman.

It is expected that a further announcement will be made on Monday 19 April.

The two British groups broke off merger talks last summer, but "the door was never closed", as one analyst put it this week.



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