Published: Mon, April 30, 2018
Global | By Enrique Rogers

Sainsbury's and Asda in talks about shock £10bn grocery merger

Sainsbury's and Asda in talks about shock £10bn grocery merger

A major uncertainty surrounding any combination would be whether the move secures approval from Britain's competition regulator, the Competition and Markets Authority (CMA), given that the deal would effectively create a duopoly. But fears were raised yesterday over consumer choice and the impact it may have on jobs.

A further announcement will be made on Monday 30 April, it said.

If the merger goes ahead between Sainbury's and Asda -Britain's second and third largest supermarket chains - the combined group would comprise 2,800 stores and would represent about 30 per cent of the United Kingdom grocery market, similar to Tesco's share.

It is understood that any investigation by the Competition Markets Authority (CMA) would only be announced once an intention to merge was formally unveiled. The Press Association reported the deal would be worth £10 billion ($13.8 billion).

The news portal suggested that competition approval would be hard, given Sainsbury's and Asda's status as the second and third largest grocers in the United Kingdom respectively.

A merger would create a retail giant with 2,800 stores, representing 31.4% of the United Kingdom grocery market - more than Tesco - worth £15bn including debt.

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Sainsbury's and Asda are this weekend finalising a £12bn merger, marking the biggest shake-up of the grocery industry in more than a decade.

One source close to Wal-Mart said the merger would allow the two companies to invest in providing more products at lower prices.

Joanne McGuinness, national officer with the Usdaw shopworkers union, said: "We will be seeking urgent meetings with the businesses to get more detail on what a possible merger will involve. GMB will be making sure the voices of supermarket workers are not lost amid all the talk of mergers and acquisitions".

"Sainsbury's confirms that it and Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury's and Asda businesses", J Sainsbury plc said in a statement. In 2016 Sainsbury's purchased general merchandise retailer Argos for 1.1 billion pounds.

The traditional high street has come under increasing pressure in recent years, with the growth in online retailers.

The deal comes at a time of major upheaval in the United Kingdom retail sector as Aldi and Lidl become increasingly powerful and the cost of running high street stores increases because of higher business rates and labour costs.

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