UK: Sainsbury's, Asda merger could make market leader

By Gokhan Kurtaran

LONDON (AA) – U.K. retailer Sainsbury and Walmart have agreed to terms over a proposed combination of Sainsbury's and Asda, a wholly owned subsidiary of Walmart.

Sainsbury's will merge with supermarket rival Asda, a decision likely to create a grocery market leader in the U.K., according to a Sainsbury’s statement released on Monday.

Sainsbury is to buy Walmart’s Asda for about 7.3 billion pounds ($10 billion), according to Reuters.

The combination firm will create one of the UK’s leading grocery, general merchandise, and clothing retail groups, with combined revenues of 51 billion pounds ($70 billion) in 2017.

It will combine a network of more than 2,800 Sainsbury's, Asda, and Argos stores and several of the U.K.’s most-visited retail websites, with a combined 47 million customer transactions per week, said the statement.

“We believe that the combination of Sainsbury's and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues. As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy,” said David Tyler, Sainsbury's chairman.

Sainsbury's and Asda could grab a 31 percent share of the grocery sector, versus current market leader Tesco’s 28 percent share.