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Sainsbury's & Asda: will it go ahead?

Sainsbury's & Asda: will it go ahead?”

"As a company, we've benefited from doing business in the United Kingdom for many years, and we look forward to working closely with Sainsbury's to deliver the benefits of the combination".

The deal would need approval from the competition authorities.

"This is a transformational opportunity to create a new force in United Kingdom retail", Sainsbury's CEO Mike Coupe said.

Sainsbury's said the $10 billion deal would save the company nearly $700 million a year, and its shares rose after the news of the merger hit.

Meanwhile, Mamequa Boafo, senior analyst, retail, at GlobalData notes there is no doubt the proposed merger will lead to the consolidation of the supplier base of both parties, which will assist in leveraging margins across both businesses.

Sainsbury's has announced a merger with Walmart-owned United Kingdom supermarket chain Asda.

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Further, Walmart would receive about £2.975 billion (US $4.095 billion) in cash, subject to customary closing adjustments, valuing Asda at around £7.3 billion (US $10.05 billion) on a debt-, cash- and pension-free basis.

Sainsbury's is valued at around £5.9 billion.

Asda and Sainsbury's announced the merger of the United Kingdom supermarket giants which will see lower prices in the stores, according to management.

Mr Coupe said: "This is a transformational opportunity to create a new force in United Kingdom retail, which will be more competitive and give customers more of what they want now and in the future".

The two companies have different cultures and appeal to different customers, with London-based Sainsbury's strong in own-brand products, and Asda, headquartered in Leeds, northern England, focused on price.

"General merchandise and clothing are both performing ahead of the market and, in response to great customer feedback and financial returns, we are opening Argos stores in our supermarkets faster than we originally planned".

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Charles Newsome, division director at Investec Wealth and Investment, was quick to halt praise for the Asda Sainsbury's deal and claimed the agreement might not be the "right thing" for Sainsbury's.

Sir Vince said the CMA should force the companies to sell off stores if the merger meant the new giant was dominant in a particular area, telling the watchdog's new chief, Andrew Tyrie, to "get tough with monopolies".

Liberal Democrat leader Sir Vince Cable, the former business secretary, said the CMA "must investigate" any deal, with shadow business secretary Rebecca Long-Bailey echoing the call.

Ms Bailey warned that, in the absence of proper vetting, it would be "British shoppers that suffer from rising prices and British workers that may be fearing for their jobs".

Advertising group WPP also stood out on Monday as its shares climbed by 8.6 percent after the company reported better than expected first-quarter net sales and reiterated its full-year guidance in the first set of results to be published without founder Martin Sorrell.

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