Sainsbury's, Walmart's Asda to create United Kingdom supermarket powerhouse

ExpressJ Sainsbury and Asda owners Wal Mart are in the final stages of an announcement to join forces

Liberal Democrat leader Sir Vince Cable, the former business secretary, said the Competition and Markets Authority (CMA) "must investigate" any deal after it emerged the companies were in advanced talks.

Asda has about a 15.6% share of the United Kingdom grocery market, Kantar estimates, a figure that has been steadily eroding for the past two years, while Sainsbury's has around 15.8%.

Sky News broke the story about the possible merger on Saturday, when it said that the two companies were in negotiations, with an announcement to be made as early as this coming Monday.

If Sainsbury's and Asda are to merge, together they would have a bigger share in the grocery market than Tesco.

However, Sainsbury's has been losing market share gains to both Tesco, it's larger rival, and Morrisons, the last of the so-called "Big Four" supermarket operators, amid a fiercely-competitive price war that has decimated profit margins.

"Sainsbury's confirms that it and Walmart Inc are in advanced discussions regarding a combination of the Sainsbury's and Asda businesses". If it decides the new entity would have too much power in the market, the authority could block a deal or force the companies to sell stores.

Tim Roache, general secretary of the GMB union, said: "Our first priority is to safeguard the job of every single Asda member, both in stores and in distribution. Part of the merger it to make sure they are protected from that, and also from the growing rise of the discounters".

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Joanne McGuinness, Usdaw national officer, said: "Our priorities will be to protect our members and ensure any deal between the retailers does not impact on their jobs or incomes".

The deal would be the largest in the United Kingdom supermarket sector since Morrisons acquired the Safeway business in 2004.

He is attempting to drive through a colossal £15bn merger between Sainsbury's and Asda, as he looks to leapfrog Tesco and fend off Amazon, Aldi and Lidl in one fell swoop.

In recent years Walmart has shifted its traditional approach from building overseas businesses itself to partnering with local players, for example in China.

In 2016 Sainsbury's paid £1.4 billion to take over Argos and Habitat owner Home Retail Group and has been expanding its ranges and presence since.

The deal comes at a time of major upheaval in the United Kingdom retail sector as Aldi and Lidl become increasingly powerful and the cost of running high street stores increases because of higher business rates and labour costs.

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