Sainsbury’s and Asda are in talks over an astonishing £15billion mega-merger to create Britain’s biggest supermarket chain.
Sainsbury’s confirmed last night that it is in ‘advanced discussions’ with Asda, owned by American giant Walmart.
Sainsbury’s and Asda have combined sales of £50billion a year and a merger is likely to mean lower prices for shoppers.
The tie-up is seen as a response to the relentless rise of German discounters Aldi and Lidl, which have been chipping away at the big supermarkets over the past few years, as well as online operations such as Ocado.
Lidl and Aldi now have a combined market share of 12.6 per cent – more than fourth-largest grocer Morrisons. Tesco is currently the country’s largest food retailer.
But the combination of Asda and Sainsbury’s, which together employ more than 350,000 staff, will leapfrog into the number one slot.
However, shoppers would initially see little change, with stores still operating under their present names.
But, according to Sky News City editor Mark Kleinman, who broke the story, Wal-Mart could ‘reverse’ Asda into Sainsbury’s – raising the prospect of Asda stores becoming Sainsbury’s. Some analysts also believe that hundreds of stores could close.
The news of the merger has shocked the City and has been greeted with alarm by trade unions, which fear stores will be closed and thousands of jobs lost. There are also concerns over pensions.
The first Asda store is pictured in West Yorkshire. After running under the name of ‘Queens’, the Asquith family merged with Associated Dairies to form Asda (Asquith and Dairies) in 1965
John James Sainsbury and his wife Mary Ann opened the first ever Sainsbury’s store (pictured) in 1869 in London’s Drury Lane (pictured in 1920)
Shopworkers’ union Usdaw is seeking ‘urgent talks’.
John Sainsbury’s (pictured) opened his first store in Drury Lane, London
National officer Joanne McGuinness said: ‘Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes.’
Sainsbury’s and Asda declined to comment but sources say that there are no plans for large-scale redundancies or shop closures.
One source familiar with the situation said: ‘We all know what Aldi and Lidl have done to the grocery market and everyone is trying to work out what an online future is going to look like.
‘This deal is about creating a long-term, competitive business – one that would ultimately lead to lower prices.’
The combined group would control about a third of the grocery market.
Both have also made significant efforts to add to their food ranges by selling more clothing, electrical and home goods, including Sainsbury’s Tu clothing and Asda’s George.
Asda then & now
- After running under the name of ‘Queens’, the Asquith family merged with Associated Dairies
- Asda’s turnover (including food, clothing, toys etc) is £21.7bn
- The average basket of shopping costs £80.05
- Corporate giant Walmart’s £6.7billion takeover made Asda a subsidiary of the US firm in 1999
- It was Britain’s second-largest supermarket chain from 2003-2014 by market share, but has now slipped to third
- The chain uses the EE network to run its own mobile phone company
Sainsbury’s then & now
- John James Sainsbury opened the first store with his wife Mary Ann with the ethos: ‘Quality perfect, prices lower.’
- Its turnover is currently at £28.4bn
- The average cost of a shopping basket is £81.80
- Qatar’s sovereign wealth fund, the Qatar Investment Authority, is currently the supermarket’s largest shareholder
- Sainsbury’s is the second largest chain of supermarkets in the UK, with Tesco in first place
- Its holding company also owns Argos
All you need to know about Asda’s CEO
Roger Burnley has been the chief executive of Asda since January 2018
Mr Burnley returned to Asda last year, after a decade-long spell at J Sainsbury
Between 1996 and 2002 he was part of the team responsible for integrating Asda into Walmart, after the American group bought the UK business in 1999
Walmart replaced the chief executive of its UK division for the second time in 18 months
Predecessor Sean Clarke, has taken on a new role with Asda’s sister company Walmart
Asda’s CEO Roger Burnley
All you need to know about Sainsbury’s CEO
Mike Coupe has been the Chief Executive of Sainsbury’s since July 2014
He served as an Executive Director since August 2007
Previously Mr Coupe was based at ASDA and Tesco, where he served in a variety of senior management roles
Other positions include the Big Food Group where he was a board director of Big Food Group plc and Managing Director of Iceland Food Stores
Coupe has been credited with the chain’s success in and creating the company’s ‘Brand Match’ campaign
Sainsbury’s CEO Mike Coupe
It is understood Walmart may keep a minority stake in the British business. That means a combined operation could benefit from the Americans’ vast buying power, helping slash prices for electronics, clothes and toys. Walmart declined to comment.
The proposed deal will come under intense scrutiny from the Competition and Markets Authority to make sure the combined business does not monopolise the sector.
However, most analysts expect the merger to go through, although Sainsbury’s and Asda could be told to sell or close stores in areas where they are too dominant.
Retail expert Nick Bubb said: ‘This has come like a bolt from the blue. Sainsbury’s boss Mike Coupe is looking to defend the chain from competition from Tesco, discount retai