 has announced plans this morning to buy Asda from Walmart (NYSE: WMT) for £7.3 billion in cash and shares. ){kind=link}
Sainsbury’s (LON: SBRY) has announced plans this morning to buy Asda from Walmart (NYSE: WMT) for £7.3 billion in cash and shares.
The merger, which was first revealed on Saturday, will create the UK’s biggest supermarket chain, overtaking Tesco (LON: TSCO), and boasting revenues of up to £51 billion.
“The retail sector is going through significant and rapid change, as customer shopping habits continue to evolve,” said the supermarkets in a statement released on Monday.
“This has led to increased competition across grocery, general merchandise and clothing, as customers seek ever greater value, choice and convenience. 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.”
If the merger goes through, the retail giants have promised a price reduction for the most popular products to benefit customers.
According to the statement, the deal will “…enable investment in areas that will benefit customers the most: price, quality, range and creating more flexible ways to shop in stores and through digital channels, across Sainsbury’s, Asda and Argos.”
Despite the reassurances made, the initial news created concern among employees over thousands of job losses. It has been confirmed since that no store closures are planned, with the combined retailer owning over 2,800 UK stores.
Following Monday’s statement, shares in Sainsbury’s jumped 20 percent to their highest since 2014.
“Sainsbury’s shares are up 15 percent after the company announced plans to merge with Asda. The move is subject to regulatory approval, but should it go ahead it would be worth £7.3 billion. Increased competition from Aldi and Lidl is main motivation behind the proposed deal,” said David Madden of CMC Markets.
“The deep-discounters have disrupted the UK supermarket sector severely, and now have a combined market share of approximately 12 percent. Sainsbury’s and Asda are the second and third-largest supermarkets by market share, and should the deal go ahead, it would put them in the first place.”