Sainsbury’s and Asda announce £7bn merger deal

UK retailers Sainsbury’s and Asda will merge to create a supermarket powerhouse set to rival leader Tesco

Walmart and J Sainsbury have announced a merger deal to create one of the UK’s leading supermarket groups with combined revenues of £51bn.

Walmart’s wholly-owned UK retail subsidiary Asda Group will combine with Sainsbury’s to create a supermarket powerhouse set to rival current leader Tesco.

Doug McMillon, Walmart’s President and CEO, said: “We believe the combination offers a unique and exciting opportunity that benefits customers and colleagues.

“As a company, we’ve benefited from doing business in the UK for many years, and we look forward to working closely with Sainsbury’s to deliver the benefits of the combination.”

Walmart will hold 42% of the share capital of the combined business, made up of 29.9% of Sainsbury’s.

Walmart will also receive approximately £2.975bn in cash, valuing Asda at approximately £7.3bn on a debt-free, cash-free and pension-free basis.

  • Both Sainsbury's and Asda have competitive health, beauty and personal care offerings.
  • Last year, Sainsbury's launched a new luxury own-brand called My Hair Matters.
  • In 2016, Sainsbury's and Asda announced plans to replace plastic stems used for cotton buds in all own-brand products.

A new force in UK retail

The combined business will be chaired by Sainsbury's Chairman David Tyler and led by the Sainsbury's CEO Mike Coupe and CFO Kevin O’Byrne.

This includes a network of more than 2,800 Sainsbury’s, Asda and Argos stores and several retail websites.

Coupe said: “This is a transformational opportunity to create a new force in UK retail, which will be more competitive and give customers more of what they want now and in the future.

“It will create a business that is more dynamic, more adaptable, more resilient and an even bigger contributor to the UK economy.

“Having worked at Asda before Sainsbury's, I understand the culture and the businesses well and believe they are the best possible fit.

“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.”

Sainsbury’s is set to benefit from Walmart’s global retail network and expertise, but the new business will operate with a “distinctive dual brand strategy”.

Asda, which became part of Walmart nearly 20 years ago, will continue to be run from Leeds in the UK by CEO Roger Burnely.