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Sainsbury's and Asda promise price cuts and no store closures in ?15bn mega-merger

Supermarket giants Sainsbury’s and Asda have confirmed they plan to merge in a blockbuster deal that would hand Asda’s current owner Walmart around ?3bn in cash and a 41pc stake in the combined business.
Reports of a deal, which first emerged over the weekend, had sparked fears it could lead to massive job cuts and higher prices, but the companies insisted they planned to keep all of their stores open and lower prices on “many of the products customers buy regularly” by as much as 10pc.
The news sent Sainsbury's shares up 20pc in early trade to 325p, their highest level since 2014, though they lost some ground to close up 15pc at 309p. 
Walmart said it expects to book a loss of $2bn (?1.5bn) on the deal, having bought Asda for ?6.7bn in 1999.  
Both brands will continue to exist, while Sainsbury’s chairman David Tyler and chief executive Mike Coupe would keep the same roles in the combined business and two Walmart representatives would be given seats on the board.
How Sainsbury’s and Asda compare
Mr Coupe, who worked at Asda earlier in his career, said he was "100pc confident we will not close any stores as a result of this transaction". 
He added: "By creating the business we are talking about creating we will employ 330,000 people, secure the pensions of both groups of employees and create lots of opportunities for colleagues in the future"
Asda will keep its headquarters in Leeds and have its own chief executive, who would sit on the wider company’s operating board.
Sainsbury's and Asda promise price cuts and no store closures in ?15bn mega-merger

Sainsbury's boss Mike Coupe will lead the combined business
The deal is expected to deliver cost savings of around ?500m per year, mostly because of its greater buying clout with suppliers, but also from property costs and “operational cost efficiencies”,  which could include cuts in senior management and back office staff.
The combined group would have 2,800 stores across the UK, including Sainsbury’s-owned Argos. The two companies had combined revenues of ?51bn last year and employ 330,000 people between them.
Market share: How the grocery sector stacks up
The announcement came alongside Sainsbury’s full-year results, which revealed a 19pc drop in pre-tax profits to ?409m, despite an 8pc rise in revenues to ?28.5bn. The drop was partly due to higher costs for restructuring and for integrating Argos, which it bought in 2016.
The merger is expected to face significant scrutiny by the Competition and Markets Authority, which will assess whether it is likely to lead to higher prices or worse service for shoppers. It will also need the approval of Sainsbury’s shareholders.
Sainsbury's-Asda merger in numbers
Speaking to the BBC, Mr Coupe conceded the CMA could force the two companies to sell off stores but insisted they would remain open regardless of who they belonged to under the terms imposed by the watchdog.
He added: “The important thing is the authorities act on behalf of consumers, we think we’ve got a very compelling case because ultimately we will be able to bring prices down for customers, improve quality, service and create a more flexible business for our customers.”
Sainsbury's-Asda Comment Puff
Mr Coupe said talks between the two companies “got going this time last year” and that he expected the deal to complete towards the end of 2019.
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