Sainsbury's and Asda close to United Kingdom retail merger

30 April, 2018, 11:47 | Author: Mable Gonzales
  • Walmart on edge of UK market: Sainsbury and Asda in merger talks

Before the deal can be given a green light, economists at the Competition and Markets Authority (CMA) are expected to spend months poring over a map of the combined group's store network. But fears were raised yesterday over consumer choice and the impact it may have on jobs.

J Sainsbury PLC, the chain's corporate name, released no other information about the potential deal and said it would make another announcement before the stock market opens today.

J Sainsbury and Wal-Mart, the world's biggest supermarket retailer, are in advanced talks about a tie-up that would create ‎a more powerful rival to Tesco, the United Kingdom market leader.

Shadow business secretary Rebecca Long-Bailey warned the merger risks "squeezing what little competition there is in the groceries market even further".

Britain's biggest retail chain is now Tesco with a market share of 27.6 percent, followed by Sainsbury's and Asda with 15.8 percent and 15.6 percent respectively, according to data from Kantar Worldpanel.

Sky News, which first reported the news, said the deal could be worth over 10 billion pounds.

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The merger would have to be approved by the CMA, because the two entities are the second and third largest grocery retailers in the UK. Together they would have a share of 31.4 per cent, putting them ahead of current market leader Tesco which has a share of 27.6 per cent.

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".

Sainsbury's confirmed on Saturday that it and Walmart, the world's largest retailer, were in advanced discussions regarding a combination of the Sainsbury's and Asda businesses, the UK's No. 2 and 3 United Kingdom grocers. "GMB will be making sure the voices of supermarket workers are not lost amid all the talk of mergers and acquisitions".

One option is Sainsbury's absorbing Asda stores, while Walmart take a large stake in the combined group. In 2016 Sainsbury's purchased general merchandise retailer Argos for 1.1 billion pounds.

In recent years Walmart has shifted its traditional approach from building overseas businesses itself to partnering with local players, for example in China.

George MacDonald, editor of Retail Week, said the grocery industry had been shaken up by low-priced supermarkets such as Aldi and Lidl.

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