Sainsbury’s (LON: SBRY) and Asda will reveal details of a new shock deal between the two supermarkets.
Revealed on Saturday, the pair is in talks over a £15 billion merger that could result in a retailer more powerful than the current leader, Tesco.
The proposed deal triggered fears of job losses, with Joe Clarke, the acting national officer of the United union, calling the deal an “absolute shocker”.
“Staff are already facing uncertainty through restructuring and changes to contracts at [Sainsbury’s]. Sainsbury’s bosses need to give workers clarity over what the future could hold and assurances over jobs as matter of urgency,” he said.
The deal between the supermarkets could lead to thousands of job losses as the two chains cut out duplication. Both Asda and Sainsbury’s have already axed thousands of jobs in recent cost-cutting drives.
In a statement released on Saturday, Sainsbury’s confirmed it was in talks with Walmart (NYSE: WMT), which has owned Asda since 1999.
“Sainsbury’s confirms that it and Walmart Inc are in advanced discussions regarding a combination of the Sainsbury’s and Asda businesses.”
The deal will trigger an investigation into the new competition as the enlarged Sainsbury’s and Tesco would control almost 60 percent of the UK grocery retail market.
“This is profoundly not in the public interest. It’s going to have negative consequences for consumers and all the along the grocery supply chain,” said Andrew Simms, the co-director of the New Weather Institute thinktank and the author of Tescopoly.
A senior supermarket executive said the proposed deal would be too difficult to get past the CMA, saying: “This will be much more difficult to get through than the Tesco/Booker deal as it will effectively create a duopoly with 60 percent of the UK grocery market. Last time they made it very clear that the big four [supermarkets] could not become three. It will be a long and challenging process to win approval and could force a lot of store disposals.”
Sainsbury’s will publish a statement describing in more detail the terms of the agreement on Monday morning at 7 am.