(Bloomberg)—Walmart Inc. is exploring options for its Asda unit including an initial public offering after plans to combine the business with J Sainsbury PLC to create the U.K.’s largest supermarket chain collapsed, according to people familiar with the matter. Asda is No. 10 in the Internet Retailer Europe 500.

U.K. antitrust regulators’ decision to block the 7.3 billion-pound ($9.4 billion) deal threw up a roadblock to the world’s largest retailer as it moves to reshape its international operations. Walmart was aiming to focus on faster-growing markets than Britain, where a shift to online shopping and the rise of discounters Aldi and Lidl are making life difficult for traditional supermarket chains.

As Sainsbury struggles to contain fallout after the U.K. Competition and Markets Authority’s move, Walmart signaled that it’s in no hurry to move on. Asda’s improved performance recently eases pressure on Walmart to take any immediate decisions. The chain has reported seven consecutive quarters of growth, helped by a combination of lower prices, an improving online business and demand for its own-label products.

“Our focus now is continuing to position Asda as a strong U.K. retailer delivering for customers,” Judith McKenna, chief executive officer of Walmart International, said in a statement after the Thursday ruling. “Walmart will ensure Asda has the resources it needs to achieve that.”

In addition to a potential listing of Asda, the U.S. retailer may also revisit a sale, though interest from private-equity firms has so far been lukewarm, said the people familiar with the situation, who asked not to be identified because discussions are private. Walmart plans to take its time to analyze the most feasible strategy for Asda and could opt to keep the business, one of the people said.

A spokeswoman for Asda declined to comment. A representative for Walmart didn’t immediately return a phone call and an email outside regular business hours.

Walmart’s international portfolio

Walmart has revamped its international portfolio by selling a majority stake in its Brazilian business and acquiring a majority interest in Indian ecommerce leader Flipkart Group in its biggest-ever deal.

A deal with Sainsbury would have let the U.S. giant keep a foot in the U.K. through a minority holding in the combined company, without the headaches of managing day-to-day operations in one of the world’s most competitive markets. An Asda IPO could give the unit a similar structure to Walmart’s separately listed Mexico and Central America business.

While Sainsbury has been losing ground since the deal was announced about a year ago, Asda has been doing better. It’s moved ahead of its would-be acquirer and is now the U.K.’s second-biggest supermarket operator behind Tesco Plc, according to research firm Kantar. It remains the third-largest for grocery sales alone, since the data don’t include Sainsbury’s Argos housewares business.

Asda, which Walmart bought in 1999, has been one of the U.S. giant’s best international acquisitions. It has generated significant cash and paid more than 3 billion pounds in dividends to its American parent, according to regulatory filings. Some of Walmart’s most senior executives, such as former international chief David Cheesewright, also cut their teeth at the U.K. unit.

“Walmart has never seen Asda as a problem child,” Sanford C. Bernstein Ltd. analyst Bruno Monteyne said by phone. “They aren’t as desperate to get rid of it as others have suggested. It’s trading well and making profit and won’t be as attractive to private equity as it was for Sainsbury’s because of the great synergies they would have created.”

Sainsbury’s is No. 4 in the Internet Retailer Europe 500.