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Sainsbury's and Asda merger could force store sales

Sainsbury’s and Asda could be forced to sell stores to satisfy competition concerns over their £13bn tie-up, analysts have claimed.

The proposed mega-deal, details of which were revealed today, would make the combined group the UK’s biggest retailer, ahead of Tesco.

Sainsbury’s has 1,412 UK stores and Walmart-owned Asda has 525. Both brands are expected to continue to operate separately.

The ‘Big Four’ grocers – Asda, Morrisons, Sainsbury’s and Tesco – have faced increased competition in recent years from German discounters Aldi and Lidl.

Sainsbury’s said the proposed merger with Asda would mean a “more competitive and more resilient business that will be better able to invest in price, quality, range and the technology to create more flexible ways for customers to shop”.

In a stock market filing today, Sainsbury’s said “there are no planned Sainsbury’s or Asda store closures as a result of the combination”. 

However, the deal will face a probe by the Competition and Markets Authority, which one analyst said could lead to Sainsbury’s and Asda having to sell stores.

Retail analyst Nick Bubb said: “The main debate is how many stores Sainsbury’s / Asda will have to promise to sell to placate the CMA.

“Too many store disposals and the deal won’t be worth doing; too few store disposals and the CMA will look toothless.”

The Evening Standard reported Knight Frank head of retail research Stephen Springham as saying there would “inevitably be some store disposals”.

Dipa Joshi, a director at Assael Architecture, said the sale of stores could lead to a “unique opportunity to convert the land use into much-needed mixed-use residential”.

He added: “The majority of the sites have great road connections and are near public transport links, as well as being located on the fringes of key urban locations, making them ideal sites to bring forward for development.”

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