Asda and Sainsbury's in 'advanced' merger talks

Sainsbury's and Asda

Asda is owned by the world's largest supermarket retailer Walmart and it is not yet clear how the deal would be structured. Sainsbury's later released a statement confirming the negotiations.

Sir Vince Cable, leader of the Liberal Democrats and the former business secretary, said the CMA "must investigate" any deal after it emerged the companies were in advanced talks. A further announcement will be made at 7am on Monday 30 April.

Sky News, which first reported the news, said the deal could be worth over 10 billion pounds.

Asda and Sainsbury's are in "advanced discussions" over an estimated £10bn merger.

It is understood that any investigation by the CMA would only be announced once an intention to merge was formally unveiled.

Sainsbury's has a predominantly southern bias to its store estate, while Asda, which is headquartered in Leeds, is more heavily concentrated in the north of England.

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

The pair have been spurred into action by the rapid rise of German discounters Aldi and Lidl, and Britons' changing consumer habits.

One source close to Wal-Mart said the merger would allow the two companies to invest in providing more products at lower prices. That deal increased Tesco's buying power by creating a food group with sales of £57.5bn.

A deal would be likely to require the blessing of the Qatar Investment Authority, which holds a 25% stake in Sainsbury's having bought into the chain more than a decade ago.

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

UBS believes sales at household goods subsidiary Argos were dragged down in the final three months of Sainsbury's financial year as it was impacted by stock clearances at collapsed electronics rivals Maplin and Toys R Us.

Retro 90s fashion is a huge trend on the high street at the moment but that nostalgia has now spilled over into food retail as the supermarket giant Sainsbury's attempts a blockbuster deal that will result in it seizing back the United Kingdom grocery crown it surrendered to Tesco in 1995.

Mike Coupe, the Sainsbury's chief executive, is said to have been a driving force behind the proposed merger. Asda did not respond to requests for comment.

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