Sainsbury’s and Asda have announced plans to merge!
Sainsbury’s and Asda are the UK’s second and third biggest supermarkets and if the merger goes ahead, it will be one of the biggest the UK has ever seen, valued at around £10 billion.
J Sainsbury and Wal-Mart, who own the Asda brand, are in advanced discussions to combine the two stores. The result will be automatic promotion to the top of the UK supermarket league, knocking Tesco off the number one spot.
If this merger goes ahead it will impact the entire UK retail sector. We are expecting a full announcement on Monday 30 April, although it’s possible that they will have to disclose their intentions before trading starts on Monday.
No details of how the merger will be structured, so shareholders of Sainsbury do not know if they will lose their shares or not at the moment.
It is possible that the Competition and Markets Authority will overrule any decision.
Sainsbury has recently taken in Argos, and Tesco tookover Booker this year. The retail industry is in a state of change at the moment, as the traditional supermarkets continue to evolve to compete with the growth of online stores, such as Amazon Pantry, and the rise of budget supermarkets, such as Lidl and Aldi.
Sky News suggested that a Wal-Mart source says the reason for the merger is to lower prices – this suggests to compete with the budget chains.