US multinational retail company Walmart owns a 51% stake in local retailer Massmart, which owns Game, Builders, DionWired, Makro and Jumbo among others. Sainsbury’s confirmed on Saturday that it and Walmart, the world’s largest retailer, were in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses, the UK’s No 2 and 3 grocers.
Britain’s big grocers, including No 4 player Morrisons, have been losing share to German discounters Aldi and Lidl and must also deal with growing demand for internet grocery shopping and the march of Amazon.
Sainsbury’s gave no details of the deal’s structure, but a source with knowledge of the situation said the holding company of the combined group would retain the Sainsbury’s name. Sainsbury’s chief executive Mike Coupe, who used to work for Asda, would lead it, the source said.
The source described the planned deal - which would consolidate a brutally competitive UK food market while helping Walmart address its underperforming UK arm through greater buying power - as a “merger”.
Three sources with knowledge of the situation said Walmart would take a minority stake in the combined business. Two said Walmart would be the biggest shareholder, with a stake of around 40%.
The Qatar Investment Authority, which has tried to buy Sainsbury’s in the past, is currently the supermarket group’s biggest shareholder with a 22% stake. The deal would probably dilute that holding. Sainsbury’s invited media and analysts to presentations scheduled for today, indicating a done deal.
Walmart declined to comment. Asda did not respond to requests for comment. Sky News, which first reported the news, said the deal could be worth more than £10bn.
Sainsbury’s shares closed on Friday at 269 pence, giving the company an equity value of £6bn.