Supermarket merger
Sainsbury’s and Asda – respectively the UK’s second and third biggest supermarket chains – are proposing to combine their businesses.
In a statement issued today (30 April), Sainsbury’s said that it had agreed terms with Asda’s US-based parent Walmart in a proposed deal that would see Walmart holding 42% of the issued share capital of the combined business and receiving £2.975bn. This would value Asda at around £7.3bn. Sainsbury’s added: “At the time of completion of the Combination, Walmart will not hold more than 29.9% of the total voting rights in the Combined Business.”
If the deal does get the regulatory green light, the combined business will overtake Tesco as the UK’s biggest supermarket with a market share of more than 31%.
Collectively, Asda, Sainsbury’s and Argos would have a network of more than 2,800 stores. Sainsbury’s chief executive Mike Coupe – who would head the merged entity – has told UK media that the deal would lead to no store closures and no job losses in stores. The plan is also to “maintain both the Sainsbury’s and Asda brands and enable them to sharpen their distinctive customer propositions”.
The Sainsbury’s statement said the merger would “enable investment in areas that will benefit customers the most: price, quality, range and creating more flexible ways to shop in stores and through digital channels, across Sainsbury’s, Asda and Argos”. So, we could perhaps expect to see an expanded roll-out of next-day and same-day home delivery services as well as click & collect offerings.
In a development that may be of particular interest to shoppers, Sainsbury’s said that it expects to “lower prices by c.10% on many of the products customers buy regularly”.
