Sainsbury's-Asda merger threatens value clothing rivals
- Author: Kelly Blake May 01, 2018,
May 01, 2018, 8:52
He said: "No, we will not close stores as a result of this deal".
"The company is planning to take a "fresh look" at its operation, and that could include asset disposals", said CMC Markets analyst David Madden.
"This is a transformational opportunity to create a new force in United Kingdom retail, which will be more competitive and give customers more of what they want", said Sainsbury's chief executive Mike Coupe.
Asked by Channel 4 News whether he will personally be in the money as a result of the merger and what is in it for him, he said: "I am a big shareholder in Sainsbury's, my shareholding is a matter of public record, you can see how many shares I own".
The Unite and Usdaw unions, which both represent store and warehouse workers, said staff at the two firms were in a state of "shock" at the news.
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Asda's USA owner Walmart would receive just under £3bn in cash plus a 42% stake in the combined business, which values the Leeds-based chain at £7.3bn.
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News of Sainsbury's return to growth in its last fiscal year was dwarfed by confirmation this morning (30 April) of the United Kingdom retailer's merger intentions with rival supermarket Asda, in a move that could challenge rival value clothing retailers in the UK.
If it goes ahead, the combination will create a high street titan with a bigger share of the market than Tesco.
That's not the case for Sainsbury's and Asda, though the fact that they have complementary regional footprints will mitigate in their favour.
The combined company will be "designed for a new era" of retailing, bringing scale in clothing and general merchandise, Coupe said.
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"We think it is a great deal all around".
It is seeking clarity on the future of Asda's stores in Scotland and its distribution centres in Falkirk and Grangemouth. The regulator has the power to require Sainsbury's to close stores in areas where the combined company would have too much market dominance.
The Labour Party's business spokeswoman, Rebecca Long-Bailey, has already called for an investigation of the proposed deal.
Ms Bailey warned that, in the absence of proper vetting, it would be "British shoppers that suffer from rising prices and British workers that may be fearing for their jobs". Shares in Tesco fell by almost 1% while Morrisons were off 1.2%.
In the financial year to December 2017, Asda saw a 2.6% in sales to around £22.2 billion and a return to positive comparable sales for the full year.
Generating net synergies, post-price investments, across the enlarged group of at least £500 million.
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