But is a merger the best solution for the two firms and their consumers? Sainsbury's said customers would see benefits including price cuts of 10% on many of the products that customers buy regularly. First, this is being driven by market weaknesses, not strengths. Bringing Sainsbury's and Asda, two companies with very different cultures together, would mean the linked enterprise leapfrogging Tesco as the country's market leader — hence the variety of grandiose promises for a better future. Combine this challenge with the prospect of online giant Amazon getting involved in the food retail market and the reasons behind the drastic shake-up are clear. This could be a challenge as both business are closely related which would create a monopoly over the grocery sales. They plan to keep their brands separate so retailers may not notice a difference. Sainsbury's market value, before trading opened on Monday, was £5.
The competition in the retail sector is as fierce as ever. Coupe, whose modest demeanour belies a steely streak, could point to his successful takeover of Argos in 2016 as a counter-example, though at £1. The deal values Asda, which was bought by Walmart in 1999, at £7. One reason mergers often come adrift is executive ego, as bosses clash over precedence. It may well come with demands to close stores. Customers, however, are likely to benefit from this and see lower prices, more choice and improvements both in store and online. Getty Images More on Asda.
Their combined revenues are in the based on 2017 figures. The supermarket, which is planning to merge with rival Sainsbury's, is to begin consultations with staff on changes that could mean up to 2,500 job cuts. Do you have a story for The Sun Online news team? The tie-up is seen as a response to the relentless rise of German discounters Aldi and Lidl, which have been chipping away at the big supermarkets over the past few years, as well as online operations such as Ocado. The two grocers are former long-standing colleagues who get on well. Paul Mumford of Cavendish Asset Management said: 'The indicated 10% lower prices on regularly bought products will have raised eyebrows amongst the food producers who will fear another squeeze on margins'.
Instead of the so-called Big Four — Tesco, Asda, Sainsbury's and Morrisons — we'll have the Big Three. As for investors, which include all of us through our pension funds and insurance policies, well we're still awaiting the promised returns. The relationship between Coupe and his counterpart at Asda, Roger Burnley, is a close one. Imagine the Nectar points you'd get for that! Asda is struggling at the lower end of the market, while Sainsbury's is caught in the middle, under pressure from heavily discounted stores and upmarket outlets. Slashing our members' jobs would hurt the service Asda customers receive. One source familiar with the situation said: 'We all know what Aldi and Lidl have done to the grocery market and everyone is trying to work out what an online future is going to look like. The grocery, general merchandise and clothing markets continue to be highly competitive and very promotional.
Q How big would the combined Sainsbury's and Asda be? What does all this mean for consumers? Bernstein analyst Bruno Monteyne said the share price did not yet reflect the material impact of the deal. In turn, Asda, which is also big in non-food products, will play host to Argos concessions in its stores. It's a question many had been asking given how the grocery landscape has been changing. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved. Critics say this could be counterproductive for the company.
So how did the market react? The industry has been wondering what its big strategic move might be. And, yes, knowing our audience better helps us find commercial partners too. The two companies are planning to merge All companies have also suffered due to the emergence of discount stores like Lidl and Aldi. Meanwhile, Sainsbury's reported a 19% fall in its annual profit for the 52 weeks to 10 March to £409m as it counted the cost of a stores shake-up. What is the buyer behaviour you see? A Two simple answers: Aldi and Lidl. Prior to today's jump, Sainbsury's shares had fallen by about 3. Areas of work affected by any changes include petrol, bakery, back office and so-called hosting.
Under the terms, Walmart will retain a 42% stake in the newly-combined business. The merger will also be scrutinised by regulators such as Groceries Code Adjudicator, which was set up to protect small suppliers. It is expected to keep a substantial stake in Asda, meaning that the new British firm would have the backing of a powerful American ally. The obvious solution is to grow their customer base and revenues, while cutting their margins, through merging. This creates a great deal for customers, colleagues, suppliers and shareholders and I am excited about the opportunities ahead and what we can achieve together.
But unions have still expressed concern about the deal and have argued that the merger is in the interests of shareholders, not customers and staff. Analysts at Global Data said at least 75 would have to go. Coupe has so is well positioned to lead the new supermarket giant. Asda and Sainsbury's both promised its customers would see savings in their weekly shop. Some analysts also believe that hundreds of stores could close. Unions have voiced fears that the merger would of jobs. The two brands will be retained as they appeal to a different customer but they see a good geographical fit, with Asda stronger in the north and Sainsbury's in the south.
The next largest supermarket will be Tesco, with 27. Q Will either Asda or Sainsbury's disappear? While it is unknown who would lead the reported merger, former Sainsbury's director Roger Burnley is now the chief executive of Asda. Their combined revenues are in the based on 2017 figures. The companies say customers will see benefits including price cuts of 10% on many of the products that customers buy regularly. Together the two chains employ 360,000 people in Britain. This created a food and drink powerhouse with a market capitalisation of nearly £20 billion.
We pay for your stories! This equates to around a 31% share of the supermarket sector, ahead of current market leader Tesco on 28%, according to Kantar Worldpanel figures. Although the merger has the potential to exploit, rather than benefit consumers, this does not mean it will necessarily do so. Argos stores, already inside branches of Sainsbury's, are likely to sprout up in Asda shops in future. Bringing Sainsbury's and Asda, two companies with very different cultures together, would mean the linked enterprise leapfrogging Tesco as the country's market leader Sainsbury's sought to challenge Tesco's domination by moving into consumer electronics, toys and other goods via its takeover of Argos and its well-established, digital and home delivery service. Both have also made significant efforts to add to their food ranges by selling more clothing, electrical and home goods, including Sainsbury's Tu clothing and Asda's George. Email us at or call 0207 782 4368. Combined, Asda and Sainsbury's will have around 2,000 stores, almost 350,000 staff and annual sales of nearly £50billion.