United Kingdom grocer J Sainsbury plans to buy Walmart's Asda in a £7.3 billion (Dh36.91bn) deal that would transform the country's supermarket industry and leave the USA retailer as the combined company's biggest shareholder. As part of the deal, Walmart will receive 42% of the issued share capital in the combined business - though will hold no more than 29.9% of voting rights - and receive GBP2.98 billion in cash.
London, Apr.30 (AP): Sainsbury's has agreed to buy Walmart Inc.'s United Kingdom unit, Asda, for £7.3 billion ($10.1 billion) in cash and stock in a deal that would create Britain's largest supermarket chain and marks a seismic shift in the country's grocery market.
The acquisition will need the approval of the Competition and Markets Authority (CMA), which is likely to pay close scrutiny and could suggest Sainsbury's sell off assets in order to avoid monopolising the grocery market.
In Britain's fast-changing retail landscape, Tesco meanwhile purchased wholesaler Booker for 3.7 billion earlier this year.
Sainsbury's and Asda are entering a relationship, but hopefully it won't mean sacrificing either of their personalities... maybe? Roger Burnley would continue as chief executive of Asda and join the group operating board of the combined business. No store closures are planned as a result of the merger, but the initiative has inevitably raised queries for the Competition and Markets Authority, which must now scrutinise the deal.
Combined revenues of the two businesses would exceed £51bn.
Plans to combine the retailers follows a shake-up in the grocery category, with the rapid growth of Aldi and Lidl eating into the market share of traditional supermarkets. "We welcome Walmart as a significant shareholder and look forward to working closely with them". The two retailers have promised to slash prices on products by up to 10%, if their merger goes through. There is, however, quite a big overlap in Northern Ireland.
As of early 2017, there were 631 Asda stores in the United Kingdom and 1411 Sainsbury's stores, meaning the merger would bring the total estate to 2042 stores.
Walmart Inc.'s plan to shed control of its United Kingdom grocery chain, Asda, reflects a global strategy to emphasize faster-growing markets over some of its more mature ones.
The Qatar Investment Authority, now the largest shareholder in Sainsbury's with a 22 per cent stake, said it supported the deal.
Sainsbury's separately announced its full-year results today, reporting underlying profit before tax of £589 million, marking a 1.4-percent rise year-on-year.