Merger talks between United Kingdom supermarket chains Sainsbury's and ASDA (Walmart)

30 April, 2018, 06:12 | Author: Lora Ball
  • GETTYSources claimed a huge announcement may take place as soon as Monday

Sir Vince Cable, leader of the Liberal Democrats and the former business secretary, said the CMA "must investigate" any deal after it emerged the companies were in advanced talks.

Any proposed deal is likely to be closely scrutinized by the competition watchdog over concerns it would reduce competition and tighten the grip the four major supermarket chains - Tesco, Sainsbury's, Asda and Morrisons - on the United Kingdom grocery market.

The two brands are expected to be retained, should a merger go ahead.

The alliance will create a supermarket goliath with nearly £50bn of annual sales, leapfrogging Tesco as Britain's biggest grocery chain.

A further announcement will be made on Monday 30 April, it said.

"The middle ground has been squeezed the most by the inevitable march and expandability of the discounters, a reinvigorated Tesco with Booker under its wing is less arrogant and more relevant than with support from suppliers and conversion with shoppers - so the potential of Sainsbury's and Asda joining forces creates a new dimension for the United Kingdom grocery market", she said.

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.

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The Bernstein analyst Bruno Monteyne predicts the supermarket bosses could carve out cost savings of £600m on the back of the deal.

"GMB will be making sure the voices of supermarket workers are not lost amidst all the talk of mergers and acquisitions. We are demanding an urgent meeting with Asda to get the answers and assurances our members need and deserve".

Sainsbury's confirmed on Saturday that it and Walmart, the world's largest retailer, were in advanced discussions regarding a combination of the Sainsbury's and Asda businesses, the UK's No. 2 and 3 United Kingdom grocers.

Monteyne says the two retailers have different fortes that will enable them to improve the other's performance: "Asda has been struggling in the United Kingdom to deal with both the threat of discounters and the growth of e-commerce, particularly in non-food", he says.

The UK's second-largest retailer has confirmed plans to merge with its nearest rival Asda in a £15bn deal that will create a mega-grocer with sales of more than £50bn and 2,800 stores.

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

In 2016 Sainsbury's paid £1.4 billion to take over Argos and Habitat owner Home Retail Group and has been expanding its ranges and presence since.

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