Merger talks between British supermarket chains Sainsbury’s and Asda are at an “advanced” stage, Sainsbury’s has confirmed.
The two brands are expected to be retained should a merger go ahead.
Sainsbury’s and Asda – the UK arm of Walmart – are the second and third largest supermarkets in the UK.
The combined group would comprise 2,800 stores and would represent 31.4% of the UK grocery market – slightly more than that of market leader Tesco.
‘Game changer’
“Sainsbury’s confirms that it and Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses,” a statement from its holding company, J Sainsbury plc, said.
The deal would be worth £10bn and a further announcement is expected on Monday morning.
Richard Lim, from economics research consultancy Retail Economics, said the merger would be a “game changer in the UK grocery market of epic proportions”.
“The potential tie-up would see the combined business take Tesco head-on,” he added.
But Richard Perks, director of retail research at Mintel, thought it was a bad deal.
“Even if you retain both brands, as soon as you try to bring them together and get some sort of cost savings, you will end up undermining both sides,” he told the BBC.
