Good Monday morning readers, just a bit of some breaking news for you in our Lifestyle segment.
Your favourite supermarket chains agree to join forces. Now if you've been reading my blog for a while, you'll know I'm an Asda girl; I do about 95% of my grocery shopping in Asda with the remaining 5% in Lidl & Tesco. I never really step foot in Sainsbury's, (as their prices are extortionate) I only ever go there if I'm driving by and I desperately need a drink or pop to their Petrol station so I'm not sure how to react to this. However, they have promised a 10% decrease in prices of their groceries so this might be interesting. Asda is currently owned by Walmart (very huge in the states)
image source-bt.com
Here's some background information as to how/why it happened....
The supermarkets said that grocery prices would fall in both chains as a result of the merger.
Sainsbury's chief executive Mike Coupe said the deal would lead to no store closures and no job losses in stores.
The combination of the UK's second and third largest supermarkets would create a giant, representing nearly £1 in every £3 spent on groceries.
The combined group comprises:
- 2,800 stores
- 330,000 employees
- 47 million customer transactions per week
- combined revenues of £51bn
"There will be be no store closures," Mr Coupe told the BBC's Today programme.
"There's been a bit of commentary over the weekend where people have been alluding to the fact that the only way of making this happen is by closing stores - that is not true.
"The stores will continue to trade and of course that's where the vast majority of people employed by both companies actually work."
Shares in Sainsbury's jumped 16% in response to the merger news. Mr Coupe - who will lead the new combined group - said he believed the two supermarkets were "the best possible fit".
"It will enable us to bring prices down, to improve quality, to improve ranges and to bring the power of Walmart in the form of buying of general merchandise and in the form of their systems and investments to the UK," he said. Walmart will retain a 42% stake in the newly-merged company following the deal. Sainsbury's and Asda said they would have a close relationship with Walmart as a strategic partner.
The supermarkets said they expected to be able to lower prices "by around 10% on many of the products customers buy regularly".
'Local monopolies'
Given the size of the two chains, the deal is expected to need approval from the Competition and Markets Authority (CMA).
At the weekend, Liberal Democrat leader Sir Vince Cable said the CMA should force the companies to sell off stores if the merger meant the new giant was dominant in a particular area. He said the move risked creating "even more concentrated local monopolies".
Labour's shadow business secretary Rebecca Long-Bailey told the BBC she was concerned at the impact of the proposed tie-up on suppliers.
The combined group "will have immense purchasing power, giving them an opportunity to bargain very hard with suppliers," she warned.
Latest figures from Kantar Worldpanel show Tesco has a 27.6% grocery market share, while Sainsbury's has 15.8% and Asda has 15.6%.
Mr Coupe told the BBC he expected the deal to be completed by the autumn of 2019. source bbc.co.uk
