Sainsbury's and Asda in talks about shock £10bn grocery merger

GETTYSainsbury’s and Asda have been under enormous pressure to compete with Aldi and Lidl

GETTYSainsbury’s and Asda have been under enormous pressure to compete with Aldi and Lidl

QIA, one of the 10 largest sovereign funds in the world, has a 22 per cent stake in Sainsbury's, which said on Saturday it was in advanced discussions regarding a combination of the UK's number two and three grocers. Sainsbury's later released a statement confirming the negotiations.

A major uncertainty surrounding any combination would be whether the move secures approval from Britain's competition regulator, the Competition and Markets Authority (CMA), given that the deal would effectively create a duopoly. It said they will make a further announcement at 0600 GMT on Monday.

What the merger of the second- and third-biggest supermarkets threatens is the creation of even more concentrated local monopolies, so it is obvious that there must be an investigation by the Competition and Markets Authority, starting immediately. Sainsbury's has a network of more than 1,400 supermarkets and convenience stores while Asda has around 600 stores.

The traditional high street has come under increasing pressure in recent years, with the growth in online retailers.

Asda and Sainsbury's have also faced a big challenge from the emergence of the German discounters Aldi and Lidl, ‎which have begun to build a big presence in the UK.

One source close to Wal-Mart said the merger would allow the two companies to invest in providing more products at lower prices.

The source described the planned deal - which would consolidate a brutally competitive United Kingdom food market while helping Walmart address its underperforming United Kingdom arm through greater buying power - as a "merger".

The deal would be the largest in the United Kingdom supermarket sector since Morrisons acquired the Safeway business in 2004.

Retro 90s fashion is a huge trend on the high street at the moment but that nostalgia has now spilled over into food retail as the supermarket giant Sainsbury's attempts a blockbuster deal that will result in it seizing back the United Kingdom grocery crown it surrendered to Tesco in 1995.

Sainsbury's also has 800 Argos outlets.

Roger Burnley, who took over as Asda CEO in January, is a former Sainsbury's executive, working under Coupe. Asda did not respond to requests for comment.

The latest statistics show that Tesco has a 25 per cent grocery market share, while Sainsbury's has 13.8 per cent and Asda has 12.9 per cent.

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