Over the weekend we reported on the merger talk between British supermarket chains Sainsbury’s and Asda, and today it’s been confirmed that they will indeed merge to become the largest British supermarket chain with over 31% market share (this has to be approved by the monopolies commission first, but it’s likely to go through).
Sainsbury’s has confirmed plans to merge with Asda, which is currently owned by US supermarket giant Walmart.
The supermarkets said that grocery prices would fall in both chains as a result of the merger.
Sainsbury’s chief executive Mike Coupe said the deal would lead to no store closures and no job losses in stores.
The combination of the UK’s second and third largest supermarkets would create a giant, representing nearly £1 in every £3 spent on groceries.
“There will be be no store closures,” Mr Coupe told the BBC’s Today programme.
“There’s been a bit of commentary over the weekend where people have been alluding to the fact that the only way of making this happen is by closing stores – that is not true.
“The stores will continue to trade and of course that’s where the vast majority of people employed by both companies actually work.”
Mr Coupe – who will lead the new combined group – said he believed the two supermarkets were “the best possible fit”.
“It will enable us to bring prices down, to improve quality, to improve ranges and to bring the power of Walmart in the form of buying of general merchandise and in the form of their systems and investments to the UK,” he said.
Walmart will retain a 42% stake in the newly-merged company following the deal. Sainsbury’s and Asda said they would have a close relationship with Walmart as a strategic partner.
The supermarkets said they expected to be able to lower prices “by around 10% on many of the products customers buy regularly”.
Savings would come through “buying benefits”, “operational efficiencies” and opening Argos shops in Asda stores, the firms said. Sainsbury’s took over Argos in 2016.
The merger also brings Argos (bought by Sainsbury’s in 2016) into Asda stores. As we said over the weekend, it will be interesting to see what will happens in the toy aisle with the added buying power of the combined group, especially with the recent demise of Toys ‘R’ Us. The UK is still yet to see the full benefit from Walmart exclusives (especially Hasbro items) coming from the US to UK stores — here’s hoping.
