Yorkshire-based supermarket Asda to merge with Sainsbury's in £12bn deal
Yorkshire-based supermarket Asda has announced that it will merge with Sainsbury's in a £12 billion deal.
The duo - the UK's number two and three supermarkets - said that the unified group would have combined revenues of £51 billion and boast a network of 2,800 Sainsbury's, Asda and Argos stores.
It will aim to generate £500 million in cost savings but Sainsbury's insisted there are no planned store closures as part of the merger, with both brands to operate side by side.
Asda bosses say the supermarket will continue to be run from Leeds with its own CEO, who will join the Group Operating Board of the Combined Business.
What does the deal mean?
The combined supermarket expects to lower prices by around 10% on products customers buy regularly.
It will see Asda owner Walmart hold 42% of the new business and receive £2.97 billion in cash, valuing Asda at £7.3 billion.
Sainsbury's is valued at around £5.9 billion.
Asda President and CEO Roger Burnley said; “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".
If it goes ahead, the combination will create a high street titan with a bigger share of the market than Tesco.
Latest figures show that Tesco has a 27.6% market share, while Sainsbury's has 15.8% and Asda has 15.6%. Together, they would move ahead of Tesco, with 31.4% of the market.
However, the merger would have to be approved by the Competition and Markets Authority (CMA).
Unions representing Asda workers are demanding an urgent meeting over concern about potential job losses.