Food & Drink

Cheaper goods? British shoppers unsure about Sainsbury’s Asda merger

KEIGHLEY, BRADFORD, WEST YORKSHIRE, ENGLAND, UK (APRIL 30, 2018) (BBC) – Local shoppers in the northern English city of Bradford questioned whether Sainsbury’s potential merger with Walmart’s Asda would see significant price changes for goods.

One shopper outside Asda said the deal seemed ‘strange’ as both supermarkets appear to aim for different target markets, although another shopper was pleased about the idea of cheaper prices for popular goods.

Sainsbury’s has agreed to buy Walmart’s Asda for about 7.3 billion pounds to create Britain’s biggest supermarket group by market share, overtaking long-standing leader Tesco.

The industry’s biggest UK deal for over a decade brings together the country’s second- and third-largest food retailers, aiming to generate savings and buying power to better compete with fast-growing discounters, a bigger Tesco after its purchase of wholesaler Booker, and the rise of online shopping.

The cash and shares deal, announced on Monday (April 30), also provides a potential exit route for Walmart, as Asda, which it bought in 1999 for 6.7 billion pounds, has been struggling to grow as discounters Aldi and Lidl attract its price-conscious customers.

The Global Insights Director at TCC Global, Bryan Roberts, said the firms have suggested they can save up to £350 million. He also believes a merger would give them more power to drive down costs when buying from manufacturers .

Sainsbury’s said the combination would generate synergies of at least 500 million pounds and enable prices to be lowered by about 10 percent on many products.

However, the transaction faces significant regulatory hurdles. Britain’s Competition and Markets Authority (CMA) said it was likely to review it.

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