Sainsbury and Asda to merge, reacting to market competition

Sainsbury's

The ensuing interview was about how his company had just entered into an agreement to merge with a competing grocery chain, the Walmart-owned Asda.

Sainsbury's insisted that no stores will close as a result of the deal, but said regulatory authorities could force it to offload stores as part of a competition probe.

It's a £7 billion which could create a super-supermarket. Sainsbury is picking up Asda to create a market-leading alliance, according to Wall Street Journal. "We think these 75 stores would be the absolute minimum that the CMA will want disposed of".

Sainsbury's insists that any stores it offloads will be done so as "trading entities", but the future of staff at those outlets - which number anywhere from 7,500 to 10,000 - will depend on whether a buyer is found and if the shops are then kept trading.

Sainsbury's said the merger would generate synergies of at least 500 million pounds and enable prices to be lowered by about 10 percent on many products.

Although the two brands will remain seperate, Sainsbury's hopes the move will strengthen the group's position in a dynamic market by allowing it combine Asda's low-priced groceries and the George clothing brand with Sainsbury's traditionally higher end products and catalogue retailer Argos (which the chain purchased in 2016).

If approved by the regulator, the deal is expected to complete in the second half of 2019.


The source described the planned deal - which would consolidate a brutally competitive United Kingdom food market while helping Walmart address its underperforming United Kingdom arm through greater buying power - as a "merger".

Sainsbury's is valued at around £5.9 billion. "It's a proud Yorkshire business and I'm a proud Yorkshire man so Asda, I'm delighted to say, will remain in Yorkshire with its headquarters in Yorkshire because this proposal is about a twin brand strategy with Asda and Sainsbury's remaining very much separate brands".

Walmart, which bought Asda in 1999 for 6.7 billion pounds, said it would focus on online sales in countries with higher growth and less intense competition.

The Forum of Private Business (FPB) has called on Sainsbury's to provide assurances to its supply chain, as the supermarket chain announces it has agreed terms with Asda to merge the two companies.

"This creates a great deal for customers, colleagues, suppliers and shareholders and I am excited about the opportunities ahead and what we can achieve together".

"Asda became part of Walmart almost 20 years ago, and it is a great business and an important part of our portfolio, acting as a source of best practices, new ideas and talent for Walmart businesses around the world".

Sainsbury's also reported its full-year results, showing a first rise in profit in four years and expressed confidence in meeting analysts' profit forecasts for 2018-19.

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