How Asda and Sainsbury’s £12billion merger could mean higher bills, job cuts and stores shut
Details of the deal will be revealed on Monday, but have triggered fears of a rise in shop prices, store closures and job losses — find out how it could affect you
THE £15billion merger between Sainsbury’s and Asda has triggered fears of a rise in shop prices, store closures and job losses.
The grocers announced a deal that would see them leapfrog Tesco as the country’s biggest supermarket in terms of UK market share.
Shadow business secretary Rebecca Long-Bailey warned it risks “squeezing what little competition there is in the groceries market even further”. She said in the absence of proper vetting by regulators, it would be “British shoppers that suffer from rising prices and British workers that may be fearing for their jobs”.
The two chains are the second and third largest grocery retailers in the UK. Together they would have 31.4 per cent of the market compared to Tesco’s 27.6 per cent share.
Details of the deal — thought to be a response to the rise of discounters Aldi and Lidl as well as to Tesco’s recent takeover of wholesaler Booker — will be revealed on Monday.
Joe Clarke, national officer for Sainsbury’s at Unite, said the news was an “absolute shocker”, with “implications for tens of thousands of jobs”.
Mr Clarke said: “Obviously, if you’ve got stores in close location to one another, stores will close”.
Sainsbury’s has 150,000 staff and 1,400 stores — more than half “convenience” outlets — with a bias to the South. Asda has 165,000 staff and 650 stores, almost all superstores, focused on the North.
Liberal Democrat leader Sir Vince Cable says the Competition and Markets Authority “must investigate” the deal.
Sainsbury and Asda bosses hope the merger will drive down shop prices as it will give them greater purchasing power.
Q&A
How much would Sainsbury’s and Asda make a year combined?
Analysts predict the megastore would rake in £50billion a year in sales.
Why do the chains want to merge?
Discounters Aldi and Lidl have taken market share from the Big Four supermarkets (Tesco, Asda, Sainsbury’s and Morrisons).
With their cut-price offers, the German giants now represent 12.5 per cent of the grocery market.
But an even bigger factor is the online threat of Amazon after it moved into the grocery sector.
Will it be more expensive to shop once they merge?
Their aim is to try to claw back customers they lost to Aldi and Lidl and create a more powerful rival to Tesco, Amazon and online grocery shop Ocado. By teaming up, the supermarkets should have more buying power which means they can cut prices.
Will stores close and will there be job losses?
A union officer has warned there will be “severe implications” for workers of both chains.
He also warned stores near one another in close locations will close.
If the deal goes ahead, who will take over the business?
Experts believe Sainsbury’s chief executive Mike Coupe, 57, will land the top job.
Will Sainsbury’s and Asda still exist and look the same?
Yes. The supermarkets plan to keep their own name and brand.
Could the Competition and Markets Authority (CMA) stop the merger?
If they fear it will become too dominant and harm rivals, suppliers and customers they could block the deal.
Russ Mould, investment director at AJ Bell said: “What it means for consumers may partly depend on what the regulator says.”
Clive Black, analyst at Shore Capital, said: “Going from a Big Four to a duopoly, it is difficult to see how it is good for consumers. Duopolies rarely work in shoppers’ interest.”
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