Sainsbury’s and Asda have agreed to merge, creating a grocery powerhouse. However, both plan to maintain their own brands respectively.
The deal is set to increase the combined revenues to over £51bn, overtaking that of the current grocery powerhouse, Tesco.
It has been revealed that there are no plans to close any of their stores, and the merger appears only to benefit consumers. Plans for Argos concessions to be placed within some Asda stores have been disclosed and price cuts of 10% on many of the products that customers buy regularly in Sainsbury’s have also been promised.
Asda’s US owner Walmart would receive just under a whopping £3bn in cash, as well as a 42% stake in the combined business, in a deal which values the Leeds-based chain at £7.3bn. Shares in Sainsbury’s leapt by as much as 20% in early trading, while rivals Tesco and Morrisons were about 3% lower on opening.
The newly enlarged grocery powerhouse will be led by Sainsbury’s chief executive, Mike Coupe. Asda will continue to be run from Leeds with its own chief executive, Roger Burnley, who will also join the board.
Mr Coupe said: “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.
“It will create a business that is more dynamic, more adaptable, more resilient and an even bigger contributor to the UK economy.”
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.”
