New business aims to cut prices by ten percent
SAINSBURY’S and Asda parent firm Walmart have sent shockwaves through the grocery industry with a proposed merger that could create the largest supermarket business in the UK.
The deal, which is subject to Competition and Markets Authority approval, would see Walmart receive a £3bn payout in exchange for a 42% share of the new combined Asda and Sainsbury’s business.
If the merger gets the green light, the new entity could account for roughly one in three pounds spent in British grocery; the latest figures from Kantar Worldpanel reveal Sainsbury’s and Asda have a combined market share of 31.4%. Tesco, the UK’s largest grocery retailer, has a market share of 27.6%.
Ambitious price reduction looks to be the order of the day for the merged business, with the supermarkets claiming they would expect to lower prices by 10% on many products consumers purchase regularly.
Following a merger, the new company would include more than 2,800 Sainsbury’s, Asda and Argos stores and several retail websties. Post-merger, it’s expected the business will be chaired by Sainsbury’s chairman David Tyler and led by Sainsbury’s CEO Mike Coupe.
Coupe said of the deal: “This is a transformational opportunity to create a new force in UK retail, which will be more competitive and give customers more of what they want now and in the future.”
Asda chief executive 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.”
