J Sainsbury Plc to Buy Walmart’s Asda for $10 Billion

The Qatar Investment Authority, which has tried to buy Sainsbury’s in the past, is now the supermarket group’s biggest shareholder with a 22% stake.

Following the merger, Walmart will hold 42% of the issued share capital of the combined business and will receive nearly £3 billion.

Roger Burnley, CEO of Asda, added: “The combination of Asda and Sainsbury’s into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice”.

By bringing together two distinctive customer propositions, the companies said they hope to create a more competitive, adaptable and resilient business.

Sainsbury’s and Asda are now the second and third largest grocery retailers in the United Kingdom, data provided by the companies at this morning’s analyst meeting revealed.

Sainsbury’s, which bought Argos in 2016, has also released its full-year results, revealing an 8% rise in group revenue, from £26.2bn to £28.5bn, but a 19% drop in pre tax profits to £409 million.

In its statement confirming the merger plans, Sainsbury’s and Asda claimed the deal would “create opportunities” for suppliers.

Sainsbury’s claim it would create significant opportunities “for suppliers to develop differentiated product ranges, become more streamlined and to grow their businesses as the combined business grows”.

Who will run the combined Sainsbury’s-Asda?

Sainsbury’s will merge with supermarket rival Asda, a decision likely to create a grocery market leader in the United Kingdom, according to a Sainsbury’s statement released on Monday. The U.K. grocery market in recent years has been locked in aggressive price wars that have trimmed retailer margins.

“We’re looking forward to helping the combined business in the future”.

“Sainsbury’s continues to surprise us with their aggressive deal-making”, said Jefferies analysts, who have a “hold” rating on the supermarket group’s stock.

Sainsbury’s and Asda say their merger will lead to in-store prices coming down by an average of 10% “on numerous products customers buy regularly”.

“I’m 100 percent confident that we will not close any stores as a result of this transaction”, Coupe said, noting that even if the CMA demanded store divestments they would be sold as trading entities.

21 – The percentage by which Sainsbury’s share price increased soon after the merger was announced. “We know that the larger these companies become, the more ruthless they are in seeking to eliminate competition and pressure producers, leaving them struggling to remain viable”. The wording of the statement makes it clear that it will aim to reduce prices on some products – its less a commitment to a price war than an attempt to convince that Competition and Markets Authority (CMA) that the deal is good for competition.

He also confirmed that the deal has the blessing of the Qatar Investment Authority, Sainsbury’s largest shareholder.