Where next for Asda and Sainsbury's?

CMA block  merger  > Extensive competition concerns


  • Supermarkets: Over 500 stores overlap -  c.50% of the supermarket portfolio

  • Disposals unlikely to address concerns - neither suitable purchaser nor a package of assets could be found

  • Discounters not an effective alternative to one-stop supermarkets

  • Online: Only three operators (Tesco, Sainsbury’s, Asda) has national presence via store pick model

  • Pure online players (Ocado, Amazon) limit services to certain parts of the UK Entry or expansion by pure online players unlikely to offset competition concerns

  • Fuel:635 PFS operated with 18% market share >  120 sites overlap with a lack of local competition


Our view

Sainsbury's

  • Refocus on cost-cutting and improve pricing

  • Deeper integration of Argos into store network

  • Fresh investment in stores and online distribution


Walmart/Asda

  • Seek an alternative buyer

  • Private equity - quick exit option but not strategic

  • Spin-off to European grocer possible, attracted by Asda’s UK market foothold

  • Walmart strategic tie-up 

  • Target for Amazon?

What next for Sainsburys Asda merger. Will Amazon buy Asda.