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Sainsbury’s confirms Asda merger deal

UK: Sainsbury’s and Walmart have agreed to merge their Sainsbury’s and Asda businesses, creating the UK’s largest retail chain with combined revenues of £51bn.

The merger of the UK’s second and third largest supermarkets will give the new business a 26.7% share of the UK grocery market, slightly more than Tesco’s 25%.

The proposed merger will retain both the Sainsbury’s and Asda brands in a network of more than 2,800 Sainsbury’s, Asda and Argos stores.

The companies say there are no planned store closures as a result of the merger and have identified synergies in buying benefits, opening Argos in Asda stores and operational efficiencies. Increased sales through digital channels are seen as a major target.

The combined business will be chaired by the Sainsbury’s chairman David Tyler and led by the Sainsbury’s CEO and CFO. Asda will continue to be run from Leeds with its own CEO, who will join the group operating board of the combined business.

In a statement this morning, the companies said: “The Combined Business will create a dynamic new player in UK retail with an outstanding breadth of products, delivered through multiple channels. Enhanced scale and a strengthened balance sheet will deliver a great deal for customers, colleagues, suppliers and shareholders of both businesses.”

Walmart will hold a 42% stake in the merged business, receiving £2.975bn of cash, valuing Asda at approximately £7.3bn.

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