Top Sainsbury's shareholder backs Asda takeover talks

30 April, 2018, 11:48 | Author: Bert Pena
  • ExpressJ Sainsbury and Asda owners Wal Mart are in the final stages of an announcement to join forces

The deal is expected to be scrutinised by the Competition and Markets Authority.

J Sainsbury PLC, the chain's corporate name, released no other information about the potential deal and said it would make another announcement before the stock market opens today.

If the deal goes ahead, Walmart, which has owned Asda since 1999, will receive Sainsbury's shares in exchange for Asda's circa 600 supermarkets, becoming the company's biggest shareholder.

It is understood that any investigation by the Competition Markets Authority (CMA) would only be announced once an intention to merge was formally unveiled.

Shadow business secretary Rebecca Long-Bailey echoed Sir Vince's calls, warning the merger risks "squeezing what little competition there is in the groceries market even further".

Supermarket giant Sainsbury's, which yesterday revealed it is in merger talks with Asda, is set to report a fresh fall in profits this week. These are two of the UK's "big four" supermarkets and they are more or less neck-and-neck in terms of market share, holding around 16pc each. "GMB will be making sure the voices of supermarket workers are not lost amid all the talk of mergers and acquisitions".

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Joanne McGuinness, Usdaw national officer, said: "Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes".

It's yet to be reported how exactly the deal would work, but it is believed that one possibility would see Wal-Mart turn Asda stores into Sainsbury's and hold a big stake in the combined group.

"The middle ground has been squeezed the most by the inevitable march and expandability of the discounters, a reinvigorated Tesco with Booker under its wing is less arrogant and more relevant than with support from suppliers and conversion with shoppers - so the potential of Sainsbury's and Asda joining forces creates a new dimension for the United Kingdom grocery market", she said.

The traditional high street has come under increasing pressure in recent years, with the growth in online retailers. In 2016 Sainsbury's purchased general merchandise retailer Argos for 1.1 billion pounds.

George MacDonald, editor of Retail Week, said the grocery industry had been shaken up by low-priced supermarkets such as Aldi and Lidl.

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