J Sainsbury and Asda, Leading British Grocers, in Talks to Merge

J Sainsbury and Asda, Leading British Grocers, in Talks to Merge

(One exception: It is nearing a deal to buy control of Flipkart, India’s greatest e-commerce firm, in what could be a multibillion-dollar transaction.)

Asda has struggled financially. In 2016, the final 12 months for which figures can be found, its gross sales fell three % from the identical time a 12 months in the past, to £21.7 billion. Profit fell 17 % throughout that interval, to £656 million.

Putting Asda along with Sainsbury, one among Britain’s greatest grocery chains, may assist the mixed enterprise negotiate decrease costs from suppliers, one of many major objectives of many retail mergers.

Sainsbury has already turned to deal making in latest years to tackle its weaknesses. Nearly two years in the past, it bought the Home Retail Group, which owned shops just like the Argos house items chain, for about £1.three billion kilos to diversify its choices.

That acquisition helped push up gross sales, with its 2017 income rising 11 %, to £26.2 billion. But income for the interval fell practically 20 %, to £377 million.

Sainsbury’s greater rival, Tesco, has additionally sought to develop by means of acquisitions. This 12 months it accomplished a nearly £4 billion takeover of the Booker Group, a meals wholesaler.

The greatest hurdle to a merger might be Britain’s competitors regulator, which can be cautious of permitting two of the nation’s greatest grocery chains to mix.

The corporations might argue that they serve completely different shoppers: Asda caters extra to cost-conscious clients, whereas Sainsbury goals for wealthier ones. Their shops are additionally largely positioned in completely different components of Britain, with Asda extra prevalent in the north and Sainsbury in the south.

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