Sainsbury’s is to buy Walmart’s Asda for around 7.3 billion pounds ($10 billion). The combination of J Sainsbury plc (Sainsbury’s) and Asda Group Limited (Asda) will create one of the UK’s leading grocery, general merchandise and clothing retail groups.
If it gets regulatory approval, the biggest British deal in the sector for more than a decade will see the second and third-largest food retailers in the country join forces, according to Reuters. Although Britain’s Competition and Markets Authority (CMA) said it was likely to review the deal, Sainsbury’s shares jumped as much as 21%, hitting their highest since July 2014, and closed up 14.5%. Shares in competing grocers Tesco and Morrisons closed down 1 and up 1.3% respectively.
“This proposed merger represents a unique and bold opportunity, consistent with our strategy of looking for new ways to drive international growth," said president and CEO of Walmart International Judith McKenna. "Asda became part of Walmart nearly 20 years ago, and it is a great business and an important part of our portfolio, acting as a source of best practices, new ideas and talent for Walmart businesses around the world. We believe this combination will create a dynamic new retail player better positioned for even more success in a fast-changing and competitive UK market. It will unlock value for both customers and shareholders, but, at the same time, it’s the colleagues at Asda who make the difference, and this merger will provide them with broader opportunities within the retail group. We are very much looking forward to working closely with Sainsbury's to deliver the benefits of the combined business.”
The combined business would create a dynamic new player in UK retail with a breadth of products, delivered through multiple channels. The companies said bringing Sainsbury's and Asda together will result in a more competitive and more resilient business that will be better able to invest in price, quality, range and the technology to create more flexible ways for customers to shop.
“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," said Sainsbury's CEO Mike Coupe. "It will create a business that is more dynamic, more adaptable, more resilient and an even bigger contributor to the UK economy. Having worked at Asda before Sainsbury's, I understand the culture and the businesses well and believe they are the best possible fit. This creates a great deal for customers, colleagues, suppliers and shareholders and I am excited about the opportunities ahead and what we can achieve together.”