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Sainsbury's, Asda agree £13bn United Kingdom supermarket mega-merger

01 May, 2018, 13:20 | Author: Shawna Walton
  • Compact Could Co-op and Morrisons become the next supermarkets to join forces

Bringing together Britain's second-and third-largest supermarket groups could generate the savings and buying power to help them better compete with fast-growing German discounters and growth at Tesco after its purchase of wholesaler Booker.

The company will retain both the Sainsbury's and Asda brands - representing almost £1 in every £3 spent on groceries - and there are no plans to close any of its more than 2,800 stores, the companies said Monday.

"This is a transformational opportunity to create a new force in United Kingdom retail", Sainsbury's CEO Mike Coupe said.

Britain's Competition and Markets Authority said it will "likely" assess whether the deal could reduce competition and choice for shoppers.

Under the proposed merger both firms will retain their separate brands but operate as a wholly-owned subsidiary of Asda parent company Walmart who will have a 42 per cent stake in the business.

The combined business will be chaired by Sainsbury's chairman David Tyler and led by its chief executive Mike Coupe and chief financial officer Kevin O'Byrne.

"It was an unfortunate choice of song, from the musical 42nd Street which I saw a year ago and I apologise if I have offended anyone", Mr Coupe said.

The planned combination of J Sainsbury plc and USA -owned Asda Group Limited was announced by the two companies in an official statement on Monday.

The two companies said: "The retail sector is going through significant and rapid change as customer shopping habits continue to evolve".

The combined business would have total revenues of £51 billion.

Sainsbury's said the combination would generate synergies of at least £500 million and enable prices to be lowered by about 10 per cent on many products.

The combination of Sainsbury's and Asda would control nearly a third of the United Kingdom grocery market, putting it ahead of Tesco.

"The transaction will, however, attract regulatory scrutiny, given that the merged companies will become the largest grocery retailer in the United Kingdom".

Sainsbury's was launched by a young couple, John James Sainsbury and Mary Ann Staples, when they opened a small London dairy shop on the day they married in 1869, according to the company's website.

J Sainsbury plc, the chain's corporate name, says Walmart will receive £4.3 billion worth of Sainsbury's stock and £2.98 billion in cash.

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