Gazeley For Sale Despite Difficult UK Commercial Property Market
Asda the supermarket chain owned by WalMart the US retailer could sell its global property development business in a deal that could fetch up to 400m. There are also rumours that WalMart is looking to sell Asda as well.
The company told staff yesterday that it was looking for a buyer for Gazeley an industrial developer which will interest rivals such as San Franciscobased AMB and Australia’s Goodman International.
Gazeley is one of the largest industrial property developers in the UK and also operates in a number of other countries including India Mexico and China. It was acquired by WalMart as part of its takeover of Asda in 1999.
Formed in 1987 the group operates as a standalone business but also provides WalMart and Asda with distribution and storage warehouses across the world.
WalMart has picked a potentially difficult time in which to sell a property business but Andy Bond president and chief executive of Asda said: “This is not a core business for us. We have previously had several unsolicited approaches for Gazeley and have now decided to review our strategic options which might include a sale of the business.”
However capital values have been in freefall as fears have emerged over occupier demand. This coupled with the greater difficulty in securing debt for the deal means Asda is unlikely to secure a high price.
ProLogis the US industrial developer was linked with a bid for Gazeley two years ago. At the time Asda said it had no interest in selling the company.
A significant part of the value of Gazeley will be its large undeveloped land bank with more than 20 sites in the UK alone and more across continental Europe and Asia.
Gazeley is the preferred developer of distribution space for WalMart International including Asda in the UK and WalMart China. WalMart is understood to be keen to sell the business with guarantees that ensure this strategic relationship continues which would allow it first choice for prime sites in the future.
Pat McGillycuddy chief executive of Gazeley said: We have produced consistent profit growth over the last five years and developed leased warehouses across Europe in 2007 with an investment value of 325m.
We have a successful business model and a strong management team that will add value to any new business partner.
WalMart wants to keep existing management in place following the sale if possible.
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