ASDA and Sainsburys hold merger talks
Written by Dan Williams on 28th April 2018
Sainsburys has revealed that talks to combine both ASDA and Sainsburys are at an “advanced” stage.
The deal would be worth £10bn and a further announcement is expected on Monday morning.
The merger news comes as a shock following the news that Sainsburys had just recently taken over catalogue retailer Argos and Habitat for £1.4bn in 2016.
Richard Lim, from economics research consultancy Retail Economics, said the merger would be a “game changer in the UK grocery market of epic proportions”.
“The potential tie-up would see the combined business take Tesco head-on,” he added.
But Richard Perks, director of retail research at Mintel, thought it was a bad deal.
“Even if you retain both brands, as soon as you try to bring them together and get some sort of cost savings, you will end up undermining both sides,”
J Sainsbury plc notes the speculation concerning a possible combination with Asda Group Ltd. Sainsbury's confirms that it & Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury's & Asda businesses. A further announcement will be made 7am Monday.
— Sainsbury's News (@SainsburysNews) April 28, 2018
George MacDonald, editor of Retail Week, said the grocery industry had been shaken up by low-cost supermarkets such as Aldi and Lidl.
“So maybe this type of mega deal will get the go ahead by the Competition and Markets Authority,” he said.
“This is quite audacious by Sainsbury’s – given it has only recently bought Argos. It’s symptomatic though of the restructuring of the supermarket industry.”
Lib Dem leader and former business secretary Vince Cable has said there must be an immediate investigation by the Competition and Markets Authority.
He said the potential merger threatened “the creation of even more concentrated local monopolies”.
In 2017, Tesco merged with Booker – the UK’s largest food wholesaler.
More to follow…