Grocery giants plan merger

James Davey and Ben Martin

Sainsbury’s and Asda are in talks to create Britain’s biggest supermarket group, a combination which would surpass Tesco’s grocery market share and be worth up to £15bn (€17bn).

Sainsbury’s confirmed, at the weekend, discussions between it and Walmart-owned Asda, regarding merging the UK’s second and third largest grocers, were advanced, adding that a further announcement would be made today.

Britain’s big grocers, including fourth largest player Morrisons, have been losing share to German discounters Aldi and Lidl and must also deal with growing demand for internet grocery shopping and the march of Amazon.

Sainsbury’s gave no details of the deal’s structure but it is expected the holding company of the combined group would retain the Sainsbury’s name and Sainsbury’s chief executive Mike Coupe, who used to work for Asda, would lead it.

Sources described the planned deal — which would consolidate a brutally competitive UK food market while helping Walmart address its underperforming UK arm through greater buying power — as a “merger”.

They said Walmart would take a minority stake in the combined business.

The Qatar Investment Authority, which has tried to buy Sainsbury’s in the past, is currently the supermarket group’s biggest shareholder with a 22% stake. The deal would probably dilute that holding.

One source said the combined company would have an enterprise value, including debt, of around £15bn and would remain listed in London.

— Reuters