Asda and Sainsbury’s agree deal to merge

Sainsbury’s and Asda have confirmed that they will merge to create a new supermarket giant in a billion-pound deal.

Asda owner Walmart announced it had agreed a deal to merge. Walmart will get 42% of the combined business, it said.

The merger will create Britain’s biggest supermarket group by market share, holding a bigger percent of the grocery market than current leader Tesco.

Sainsbury’s announced in a statement that it will buy Walmart’s British unit Asda for £7.3 billion pounds ($10.1 billion) in cash and stock.

The new supermarket group will have combined revenues of £51 billion and will aim to generate £500 million in cost savings, it said.

David Tyler, Sainsbury’s chairman, said: ‘We believe that the combination of Sainsbury’s and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues.

‘As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy.

‘The proposal will bring together two of the most experienced and talented management teams in retail at a time when the industry is undergoing rapid change.’

Asda boss Roger Burnley said: ‘The combination of Asda and Sainsbury’s into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice.

‘Asda will continue to be Asda, but by coming together with Sainsbury’s, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive.’

In its statement, Sainsbury’s said the combination would see both Sainsbury’s and Asda maintain their own individual brands.

More than 2,800 Sainsbury’s, Asda and Argos stores will be combined, it said, ‘to create greater choice for customers through more store formats and channels, with a combined 47 million customer transactions per week’.

‘We expect to lower prices by 10% on many of the products customers buy regularly,’ a spokesman said.

There have been calls for the proposed merger to be investigated by the competition watchdog over fears of the impact on consumer choice.

TNT Business

Photo Credit: ITV News

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