New research has shown that at least 73 supermarkets will have to be sold for J Sainsbury’s (LON:SBRY) proposed merger with Asda to be given the go-ahead, the BBC reports. The two grocers announced tie-up plans earlier this month, with the merger set to replace Tesco (LON:TSCO) as Britain’s biggest grocer.
Sainsbury’s share price has advanced in London this morning, having added 1.02 percent to 308.00p as of 08:42 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.08 percent lower at 7,694.95 points.
The BBC reported this morning that according to new research, 73 supermarkets will have to be sold in order for Sainsbury's proposed merger with Asda to be given the go-ahead. While the parties recently agreed the terms of the tie-up, the deal, which is poised to create the UK’s largest supermarket group by market share, will face scrutiny by the Competition and Markets Authority (CMA).
“There hasn’t been a retail deal like this in more than a decade,” David Haywood, founder of Maximise UK, which is an expert in identifying the best locations for stores, told the newswire. He reckons at least six percent or 73 of the combined group’s supermarkets are at risk, a figure which excludes convenience stores.
Haywood further noted that the real focus would be on how Sainsbury’s and Asda's main supermarkets operate at a local level and how they overlap, with the competition watchdog to be “concerned about whether the deal reduces the number of competing brands within a 10 or 15 minute drive time”.
Maximise UK also said that if the CMA takes a more conservative view and excludes discounters Aldi and Lidl as effective competitor brands, then the number of potential store disposals leaps to 245, which would weaken the financial merits of the tie-up.