Supermarket giants Sainsbury’s and Asda have confirmed they plan to merge in a blockbuster deal that would hand Asda’s current owner Walmart around £3bn in cash and a 41% stake in the combined business.
Reports of a deal, which first emerged over the weekend, had sparked fears it could lead to massive job cuts and higher prices, but the companies insisted they planned to keep all of their stores open and lower prices on “many of the products customers buy regularly” by as much as 10%.
The news sent Sainsbury’s shares up 20% in early trade to 325p, their highest level since 2014, though they lost some ground to close up 15% at 309p.
According to The Times shareholders in J Sainsbury have backed the retailer’s proposed deal.
News of the possible tie-up, which has already secured the support of the Qatar Investment Authority, Sainsbury’s biggest shareholder, came after nearly two years of talks between Sainsbury and Walmart, the American owner of Asda.
The FT added that MPs and analysts have warned of the prospect of thousands of job losses and the closure of scores of supermarkets as Britain’s competition regulator gears up for an extended investigation into J Sainsbury’s plans to take over Asda.
Analysts at Global Data, a research company, forecast that 75 Asda shops “would be the absolute minimum” that the Competition and Markets Authority “will want disposed of”.
Sainsbury’s chief executive, Mike Coupe, asked that the competition regulator’s investigation be fast-tracked.
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