How big is a combined Sainsbury’s Asda going to be?

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From left to right: Sainsbury’s CEO Mike Coupe, Walmart International boss Judith McKenna and Asda CEO Roger Burnley celebrate the merger

With the recent news that Sainsbury’s and Asda are planning a £12billion super-merger, which would create Britain’s biggest retailer, there are many questions which need to be addressed.

BLM takes a look at the key facts that show the potential implications of this important deal.

Sainsbury’s shares rocket

Job losses

Combined, Asda and Sainsbury’s will have around 2,000 stores, almost 350,000 staff. However, many critics have pointed out that when Morrisons bought Safeway in a far smaller deal in 2003, the Competition and Markets Authority forced the supermarkets to offload 53 stores.

There is much belief that the same could happen again with this deal in 2018, even if Sainsbury’s CEO Mike Coupe has clearly stated that he is aiming for no job losses,

Tim Roache, GMB General Secretary, said: “It remains to be seen if this ‘supermarket sweepstake’ is the real deal or a bargain basement ready meal.

“Hundreds of thousands of workers stand to be affected, and all know such announecements tend to be followed by management speak like ‘rationalism’ in the name of ‘efficiency’/ What that usually means is job losses or cuts to pay, terms and conditions which would be wholly unacceptable. Not least because ASDA workers have already voluntarily agreed to change their contracts to be more flexible in order to play their part and help their employer be more profitable.”

John Colley, professor at Warwick Business School, believes that jobs will be lost.

He said: “Ultimately there has to be job losses and the suppliers will have to pay through lower prices for the larger volumes they may see. Customers will see reduced choice and the current price war is likely to persist.”

The prospect of Sainsbury’s and Argos (part of the J Sainsbury’s group) combining with Asda and its current parent, Walmart is an exceedingly powerful combination.

While it seems good news for investors and shoppers, who may see lower prices as a result of a new price war, this could be disaster for employees.

Time will tell.

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