Sainsbury and Asda merger could force sale of 300 stores

Sainsbury could be forced to sell around 300 stores all across the UK if its merger with Asda is approved by regulators, according to a new analysis.

According to research from the Times, there are at least 300 stores where the merger could run into local competition concerns, an issue that could determine whether regulators grant permission for the move or not.

Analysts at UBS, Sainsbury’s house broker, calculated that 28-54 stores may have to be sold, though if discounters Lidl and Aldi were excluded as competitors, this could jump to 132-161 stores.

Sainsbury and Walmart owner Asda agreed the merger deal in April, with Walmart holding a 42% equity stake in the enlarged UK group. At the time each of the two chains accounted for either side of 16% of the market and combining to grab around a 31% market share, overtaking current leader Tesco's 28% share and ahead of fourth-placed Morrisons with 10.5%.

In May, the Competition and Markets Authority invited comment on the impact of the deal ahead of a formal 'phase one' inquiry.

The Times, working with unnamed "industry bodies", said around half of the 300 local competition areas could be seen as problem locations by the Competition and Markets Authority as neither Morrison's or Tesco might want or be able to buy the outlets.

Other grocers such as Waitrose and Marks & Spencer have scaled back expansion programmes due to unsteady finances.

The CMA has yet to formally begin its investigation, having said in June that its mandate "relates to assessing the potential impact of that merger on competition. This assessment is critical in ensuring that consumers are able to benefit from the lower prices, better service, or greater choice that effective competition is able to bring about."