Walmart, the world’s largest retailer, announced on Monday that it was selling its UK grocery chain Asda to rival Sainsbury’s for $10.8 billion. The deal would create Britain’s biggest supermarket group with a market share of about 31 percent, ahead of current leader Tesco’s 27 percent.
The move is a bet by Walmart that Sainsbury’s can better compete against Tesco and German discounters Aldi and Lidl, which have been eating into the market share of Britain’s traditional Supermarkets.
“The UK grocery market is one of the most competitive in the world and the combined company will be even better placed to compete within it,” Walmart CEO Doug McMillon said in a statement.
Sainsbury’s CEO Mike Coupe said the deal would create “substantial value” for shareholders and allow the company to invest more in price, quality, range and technology.
The deal is subject to approval by Britain’s competition watchdog, which is likely to scrutinize the impact on consumers. Coupe said he was confident the regulator would clear the deal.
If approved, the deal would see Walmart receive just over $4 billion in cash and a 42 percent stake in the combined company. It would also see Sainsbury’s assume about $5 billion of Asda’s debt.
The deal between Walmart and Sainsbury’s was finally completed on Monday, February 25th 2019 after months of waiting for regulatory approval. This created Britain’s largest supermarket group with a market share of 31 percent.
