Sainsbury's, Britain's No. 2 supermarket, and Asda, the UK arm of Walmart that is the No. 3 player, are close to securing a merger deal, a source with knowledge of the situation told Reuters on Saturday.
The combination, creating a group worth over £10 billion would form a more powerful rival to British market leader Tesco.
The combined group would retain the Sainsbury's name, though Asda stores would continue to trade under their existing banner, the source said.
The source said Mike Coupe, Sainsbury's chief executive, would lead the combined group.
READ MORE: What leading retail analysts said about the proposed deal
Negotiations
Sky News broke the story about the possible merger on Saturday, when it said that the two companies were in negotiations, with an announcement to be made as early as this coming Monday.
The news portal suggested that competition approval would be difficult, given Sainsbury’s and Asda’s status as the second and third largest grocers in the UK respectively.
It quoted analysts as saying that ‘a reduction in the pool of national food retailers of major scale would be almost impossible to secure approval for without the disposal of many hundreds of stores’. However, it did note that Tesco’s recent takeover of Booker may have given a ‘green light’ for future retail tie-ups.
News by Reuters, edited by ESM. Additional reporting by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
