Asda Opticians included in Sainsbury's merger

Asda Opticians included in Sainsbury's merger

What type of deal will go ahead?

"The combination of Asda and Sainsbury's into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice", added Roger Burnley, Chief Executive Officer of Asda.

In Europe all eyes were on Sainsbury's, whose shares shot up at the open, trading up 14.9% by 0828 GMT after the British supermarket to buy Walmart's Asda for about 7.3 billion pounds ($10 billion) to create Britain's biggest supermarket group by market share.

With stores closures not on the cards now, some suppliers already fear they will be squeezed to deliver the 10% price cuts Sainsbury's and Asda are promising. Combined revenues stood at approximately £51bn for 2017.

However, he said there was still a major hurdle to overcome in the form of a likely review from the UK's competition watchdog, the Competition and Markets Authority (CMA).

FSB chairman Mike Cherry said: "A merger of this size will concentrate a lot of power in the hands of one giant company, and it's important that power isn't misused to coerce small suppliers into accepting unfair contracts and poor payment terms".

"This deal with see the consumer win two-fold".

He appeared to look down the lens of the camera at one point as he did so.

In other words, four players would become three, with two of those players accounting for more than half the grocery market between them.

Asda's retail network includes 584 grocery stores, 18 stand-alone fuel stations and 33 Asda Living stores and related online properties, as well as George, a leading apparel retailer with both in-store and online offerings.

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This included Asda and Sainsbury's stores that sit metres from each other in many towns and cities.

"I am not sure Sainsbury's are doing the right thing here, to be honest, that would be my first thought, despite the 20 percent pop in the share price". The competition authorities will also note that the combined supermarket will still only have around the market share of the industry leader, Tesco, in a sector where dominance has been brutally eroded by Aldi and Lidl. "As growth in the clothing sector continues to elude physical retail, the grocers must utilise the online channel to retain customer loyalty".

USA retail behemoth and Asda owner Wal-Mart - known for its cut-throat supplier negotiations - would hold 42% of the issued share capital and the combined business would receive £2.975bn in cash, valuing Asda at around £7.3bn. If given the green light, pending various approvals, Walmart will hold 42% of the combined business, according to a press release published on Monday.

Walmart will be a long-term shareholder and partner and will leverage its global scale and investment to support the combined business.

Walmart, which operates stores under 55 banners in 27 countries outside the US, has taken some lumps as it tries to import its low-price strategy overseas. The supermarkets said that grocery prices would fall in both chains as a result of the merger.

The companies said that cost reductions would be possible thanks to "buying benefits, "operational efficiencies", and the opening of Argos shops in Asda stores".

CEO Mike Coupe said: "We are focused on making Sainsbury's a destination of choice".

If there will be no job losses in stores as a result of this deal, something on which Mr Coupe has been emphatic, unions will naturally be concerned about potential job cuts in warehousing and distribution.

Meanwhile, Sainsbury's booked a return to profit in the period with underlying profit before tax rising 1.4% to GBP589m from GBP581m in the prior year.

Walmart shares are down 9.8% this year.

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