Sainsbury's, Walmart's Asda to create United Kingdom supermarket powerhouse

30 April, 2018, 11:48 | Author: Jason Torres
  • Sainsbury's Open New Energy Efficient Store In King's Lynn

A major uncertainty surrounding any combination would be whether the move secures approval from Britain's competition regulator, the Competition and Markets Authority (CMA), given that the deal would effectively create a duopoly.

Merger talks between British supermarket chains Sainsbury's and Asda are at an "advanced" stage, Sainsbury's has confirmed.

Sainsbury's and the similarly-sized Asda would overtake Tesco with a combined market share of 31.4 percent versus Tesco's 27.6 percent, according to the latest data from market researcher Kantar Worldpanel.

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

A merger between the UK's second and third largest supermarket chains would create a new group with huge shares of the market in food, clothing, household goods and toy retailing that would be more powerful than Tesco.

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.

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Sky News broke the story about the possible merger on Saturday, when it said that the two companies were in negotiations, with an announcement to be made as early as this coming Monday.

News of the potential deal also sparked concern among workers' unions, which demanded urgent meetings with Sainsbury's and Asda chiefs.

Joanne McGuinness, Usdaw national officer, said: "Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes".

The combined group would retain the Sainsbury's name, though Asda stores would continue to trade under their existing banner, the source said. In April 2016, they announced a £1.4 billion takeover of Argos, which led to better than expected results the following Christmas.

Britain's traditional retail industry is under enormous pressure from the prolific growth of online rivals which are not saddled by the fixed costs of bricks and mortar‎ players.

In an interview with the BBC, Richard Lim, from economics research consultancy Retail Economics, said the merger would be a "game changer in the United Kingdom grocery market of epic proportions".

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