Food store giants in shock talks to merge

Asda is in talks over a

£10 billion tie-up with Sainsbury’s which could create the UK’S largest supermarket chain.

Sainsbury’s confirmed it was in “advanced” discussions with US retail giant Walmart, which owns Asda, about a merger – a move which could see the combined business overtake Tesco as the market leader in Britain.

Such a combination would cause upheaval on the high street and watchdogs are likely to demand the sale or closure of hundreds of stores to stop a merger dominating swathes of the UK retail market, analysts warned.

Sainsbury’s has more than 1,400 shops across Britain – 100 of them in Scotland – while Asda has 642 stores nationwide with a strong presence north of the border.

Sainsbury’s has about 150,000 staff while Asda employs about 165,000 people.

A combined Sainsbury’s-asda would enjoy almost a third of the UK retail market, putting it ahead of current number one Tesco, which has a 28% market share.

According to data from retail analyst Kantar, Sainsbury’s and Asda each have about 16% of the market – and a combined business would have an annual turnover of £50bn.

Leading retail commentator Richard Hyman believes a merger would be unlikely to be bad news for customers, or significantly impact smaller national rival chains such as Morrisons.

“With competition from German discounters Aldi and Lidl, Asda has had to run faster just to stand still,” he said.

“But food prices are unlikely to rise as a result of any tie-up.”