Asda stores could become Sainsbury’s if massive £10billion supermarket merger gets green light
The reported deal, which could be announced as early as tomorrow, would merge Britian's second and third biggest supermarket chains
ASDA could be about to become a footnote in retail history as part of a sensational £10billion deal to create Britain's biggest ever supermarket chain.
Its parent company Wal-Mart, the world's biggest retailer, is in advanced talks with J Sainsbury about a shock tie-up which could knock Tesco off top spot in Britain.
It is not yet clear how the deal would be structured.
But one option is Sainsbury's absorbing Asda stores, while Walmart take a large stake in the combined group.
The supermarket was one of the first to establish large stores in the UK after it was founded in 1965, although the firm has its roots in Yorkshire dairies dating back to the 1920s.
An announcement on the reported deal, which would rock the UK retail industry, is expected to be made tomorrow morning.
It is thought that the deal would involve Asda stores across Britain re-branding into Sainsbury's outlets in the long term, with job losses likely.
A spokeswoman for shopworkers' union Usdaw said: "Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes."
Tim Roache, GMB general secretary, added: "Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution. We are demanding an urgent meeting with Asda to get the answers and assurances our members need and deserve.
"GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions. We should never forget these companies' empires are built upon the hard work of their employees.
"Rest assured, we will be exploring every available legal avenue to protect our members' jobs."
GOOD NEWS FOR YOU, by NICK BUBB, Retail analyst
THIS could be good news for the consumer.
Sainsbury’s could bring a lot to the Asda party with better food ranges and more attractive stores.
And prices would be likely to go down especially in areas like clothing and electricals.
This would have a ricochet effect on other retailers and create more competition.
Some stores may have to close so there is not too big a monopoly — but Asda is bigger in the North and Sainsbury's more so in the South, so that would go in their favour.
Any proposal to merge Britain’s second and third largest supermarket chains - which have combined sales of £50bn a year - would need to be approved by the Competition and Markets Authority (CMA).
Some industry analysts believe that CMA’s decision to approve market leader Tesco’s recent £3.7bn takeover of wholesaler Booker may have prompted other firms to explore similar mergers.
Both Asda and Sainsbury’s have faced pressure from the emergence of online rivals and German budget stores Aldi and Lidl.
The European pair have a combined market share of 12.6 per cent - but Tesco is currently the Britain's biggest food retailer with a mammoth 27.6 per cent.
If no branches close, the new retailer would leapfrog Tesco into first place with 31.4 per cent.
The merger would also be scrutinised by regulators such as Groceries Code Adjudicator, which have been set up to protect small suppliers.
A source close to Wal-Mart said the deal would allow the two giants to provide products at lower prices, reports Sky News.
In a statement, Sainsbury's said: "J Sainsbury plc ("Sainsbury's") notes the speculation concerning a possible combination with Asda Group Limited.
"Sainsbury's confirms that it and Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury's and Asda businesses. A further announcement will be made at 7am on Monday 30 April."
If the reported deal is sealed it would be the biggest in the UK since Wm Morrison bought Safeway in 2004.
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Retail expert Nick Bubb told : "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 retailers such as Aldi and Lidl, and online retailers such as Amazon and Ocado.
"The deal is a worry for smaller players such as Waitrose and Morrisons."
Sainsbury's recently bought Argos and had considered taking over wholesale businesses such as Palmer & Harvey.
While it is unknown who would lead the reported merger, former Sainsbury's director Roger Burnley is now the chief executive of Asda.
Sky News also reports that the Sainsbury's chief exe Mike Coupe is “one of the driving forces” behind the merger.
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