Asda mulls Sainsbury bid antitrust impact-sources

By Eleanor Wason and Rachel Sanderson

LONDON, March 26 (Reuters) - Asda, the UK arm of Wal-Mart Stores Inc. (WMT.N), is sounding out advisers on whether a bid for rival J. Sainsbury Plc (SBRY.L) would break competition rules, sources familiar with the matter said on Monday.

Asda was looking to contact relevant regulatory authorities to explore the feasibility of it bidding for Sainsbury should a private equity consortium launch an offer for Britain's third biggest supermarket owner, one of the sources said.

"Asda is interested in getting involved in some way with Sainsbury," a second source added.

It would have to consult regulators on the available options, whether that meant a full bid for the company or buying any assets that private equity buyers chose to sell, the source added.

A spokesman for the Competition Authority declined to comment.

Nobody was immediately available for comment at Asda or the Office of Fair Trading.

A group of private equity firms said on Feb. 2 it was considering making an offer for Sainsbury, setting off a wave of speculation about possible rival bidders for the retailer.

Britain's takeover watchdog has set an April 13 deadline for a decision to be made by the group, which includes CVC Capital Partners [CVC.UL], Blackstone Group [BG.UL], Kohlberg Kravis Roberts [KKR.UL] and Texas Pacific Group [TPG.UL].

U.S.-based buyout firms Bain Capital and Apollo are also considering teaming up to make a counter-offer for Sainsbury, a source familiar with the matter told Reuters earlier this month. Asda Chief Executive Andy Bondy declined to comment last month on talk he could be considering a bid for Sainsbury. He has said that he could consider acquiring convenience stores, an area where Sainsbury and larger rival Tesco (TSCO.L) dominate.

Asda could present a strong case to the Competition Commission for a full offer for the company by arguing that an Asda-Sainsbury tie-up is the only way to create a real long-term competitor to Tesco, Citigroup said in a research report last month.

It also suggested that Asda, along with other space hungry retailers, would be a willing buyer of some of Sainsbury's stores if a private equity buyer decided to break up the company.

A Sainsbury fourth-quarter trading statement due on March 28 is expected to provide a watershed for any bid, with analysts forecasting a rise of 4 to 5.5 percent in like-for-like sales excluding gasoline.

Sainsbury pension trustees said on Friday the consortium could have to address a pension hole of as much as 3 billion pounds ($5.9 billion) to succeed in bidding for the company.

((Writing by Eleanor Wason; editing by Greg Mahlich; Reuters Messaging: eleanor.wason.reuters.com@reuters.net; Tel: +44 20 7542 8058)) Keywords: SAINSBURY ASDA/

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