Gifts Today magazine

Details of Sainsbury's/Asda deal revealed

J Sainsbury’s shares have jumped by 20% at the start of today's trading, after it's confirmed that the company has agreed to merge with Asda - creating Britain's largest supermarket chain

The parent companies of both companies have agreed terms for a proposed merger that would create one of the UK’s biggest retail groups, with combined revenues of around £51 billion.

Tesco currently holds 27.6 per cent of the UK’s grocery market, while Sainsbury’s and Asda hold 15.8 per cent and 15.6 per cent respectively. Should the deal be approved by competition authority it would create the biggest grocer in the UK, putting it ahead of Tesco by market share. The new combined business would own more than 31 per cent of the grocery sector compared with the nearly 28 per cent Tesco holds following its merger with wholesaler Booker.

Asda's parent company Walmart will receive £3bn in cash, with the remainder paid in shares to give it a 42 per cent stake in the combined company. The US retail giant will not, however, hold more than 29.9 per cent of the voting rights.

Asda will continue to be led by its own chief executive, though the newly created company will be headed up by Sainsbury's CEO Mike Coupe. Sainbury's CFO Kevin O'Byrne has said the merger would result in no job losses.

Sainsbury's has already reportedly said it will look to slash prices on everyday items by 10 per cent following the merger.

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