Sainsbury’s/Asda merger will see 75 Asda stores close - analysts

The ASDA head offices in Leeds West Yorks., as the Wal-Mart company announces a merger deal with rival Sainsburys, April 30 2018. SWNS picture
The ASDA head offices in Leeds West Yorks., as the Wal-Mart company announces a merger deal with rival Sainsburys, April 30 2018. SWNS picture
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At least 75 Asda stores could close following the merger with Sainsbury’s, according to GlobalData.

Patrick O’Brien, retail research director at the firm, said: “While there are no plans to close any stores at this time, regulators will be looking to see how many Asda stores are in close proximity to Sainsbury’s stores.

“Seventy-five Asda stores have a Sainsbury’s (excluding Locals) in the same sector.

“We think these 75 stores would be the absolute minimum that the CMA will want disposed of.”

The analysis seemed to tally with that of analysts at Peel Hunt whose head of research Charles Hall said: “While the Sainsbury’s/Asda merger might look good on paper, we see no chance of it getting through the CMA without a major dismemberment of the combined business.”

Bosses at both Sainsbury’s and Asda this morning were adamant hat not store closures were planned as a result of the merger with Sainsbury’s boss Mike Coupe saying he expected the deal to create jobs rather than cut them.

Asda has also stated it will not make any changes to its Asda House headquarters in Leeds.

Mr Hall added: “This will only be possible if there is an acquirer for a significant proportion of the business and Morrisons is the only acquirer that makes sense.

“This would take the big 4 down to 3, which looks highly unlikely to get through the CMA. It seems particularly surprising that the management team that prevaricated about the NISA acquisition and decided not to proceed due to concerns on getting it through the CMA.

“This will be a key merger for incoming CMA boss Andrew Tyrie to assess, which makes reading the CMA a bit harder. Clearly synergy savings would be substantial if the deal was to complete, which would come through sourcing benefits as well as the reduction in central staff, IT and distribution. This would clearly be of concern for the suppliers, but there would be winners and losers.”