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

Apr 29, 2018, 13:55
Sainsbury's and Asda in talks about shock £10bn grocery merger

Sainsbury's, the UK's second-biggest grocery chain, said it is in advanced discussions about a merger with Walmart's British unit, Asda, as retailers adjust to swiftly changing shopping habits.

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.

Sainsbury's and Asda have been under enormous pressure to compete with German budget stores Aldi and Lidl, which have racked up a huge following in the UK.

The latest statistics show that Tesco has a 27.6% market share, while Sainsbury's has 15.8% and Asda has 15.6%.

The combination would create Britain's largest supermarket chain, with a joint market share of 31% and 2,800 stores, moving the merged company ahead of market leader Tesco.

On the face of it, news that Asda and Sainsbury's are looking to combine their businesses should be unthinkable.

Sainsbury's said: "A further announcement will be made at 7am on Monday 30 April".

One option is Sainsbury's absorbing Asda stores, while Walmart take a large stake in the combined group.

Sainsbury's is also looking for ways to boost up its market position in the wake of Tesco's recent takeover of Booker.

In 2016 Sainsbury's paid £1.4 billion to take over Argos and Habitat owner Home Retail Group and has been expanding its ranges and presence since.

Any proposals for a merger of this scale would require approval from the Competition and Markets Authority (CMA).

Shop workers' union Usdaw said it was seeking urgent talks with the two retailers.

Tim Roache, GMB general secretary, said: 'Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution.

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