Historic and pivotal was how Sainsbury’s chairman David Tyler described the company’s plan to merge with Walmart subsidiary Asda when it was formally announced on Monday.
Defensive and rational were the adjectives preferred by many analysts. Whether the combination makes UK food retailers more appealing investments depends on the response of regulators — and rivals.
The industry’s biggest problem, as Sainsbury’s chief executive Mike Coupe readily admits, has been that it has continually expanded capacity in a market that is essentially flat. Combining Sainsbury’s and Asda will not immediately reduce capacity.
