Asda expresses interest in HMV to compete with Tesco and Amazon

Asda is considering a rescue bid for collapsed music retailer HMV, pitching itself in direct competition with the likes of Hilco and Game which have been speculated as the potential bidders for HMV. Britain’s second biggest supermarket chain is planning to pitch in a better deal for HMV’s administrators by offering to acquire the collapsed retailer’s brand and business, rather than simply converting the stores into convenience food shops.

If Asda bids for HMV, it will put it head-to-head with restructuring firm Hilco to buy the business, which collapsed into administration in January. Hilco, which bought up the retailer’s debt in January, is understood to be in talks over a £50m deal for HMV. Analysts opine that a deal for some or all of HMV’s remaining 120 stores will need to be struck within the next two weeks when HMV faces a huge rent bill.

Running HMV would be a very different ball game for Asda but it would give the supermarket greater bargaining power with HMV’s suppliers, who want to have a high street presence. Asda may plan to use HMV brand to compete with Tesco’s Blinkbox brand in the entertainment domain and it can also think of taking on Amazon which is increasingly treading on the supermarkets’ territory in mail-order shopping.

It may be noted that when HMV collapsed into administration, the company had 223 UK sites and employed 4,123 staff. However, Deloitte is closing more than 100 locations and plans to leave the retailer with a “residual portfolio” of 116 stores. Just how interested Asda is in buying out HMV and how it plans to withstand competition from other strong bidders remains to be seen in the near future.