Superstores merger puts thousands of jobs at risk

Deal would create high street titan with a bigger share of the market than Tesco

The fate of thousands of supermarket jobs is in doubt after details of Sainsbury’s shock £12 billion merger with Asda appeared.

Bosses at the grocery giants initially insisted no stores would close as a result of the deal, but later admitted regulatory authorities could force them to offload stores as part of a competition probe.

Sainsbury’s has estimated a range of stores could be sold as part of its modelling ahead of the deal.

This estimate, based on possible outcomes from the Competition and Markets Authority investigation, has been used by bosses to calculate that £500 million in cost savings will be produced when the companies merge.

While an exact number of store closures was not divulged by the chains, numbers crunched by research firm Globaldata show that “at least” 75 stores where Sainsbury’s and Asda overlap are at risk.

Patrick O’brien, UK retail research director at Globaldata, said: “Regulators will be looking to see how many Asda stores are in close proximity to Sainsbury’s stores.

“Seventy-five Asda stores have a Sainsbury’s (excluding Locals) in the same sector. We think these 75 stores would be the absolute minimum that the CMA will want disposed of.”

Sainsbury’s insists any stores it offloads will be done so as “trading entities”, but the future of staff at those outlets, which number anywhere from 7,500 to 10,000, will depend on whether a buyer is found and if the shops are then kept trading.

For its part, the CMA said the merger is “likely to be subject to review”, adding it will assess whether the deal could cut competition and choice for shoppers.

But Mr O’brien added: “They (Sainsbury’s and Asda) know there are going to be closures but they do not want anyone associating them with the decision to close.

“It is very important to them to keep their hands clean because when the job cuts come, and they eventually will, they will be able to pin it on the CMA.”

Details of the deal came after the companies – the UK’S number two and three supermarkets – confirmed on Monday morning that the deal will create a retail titan with a bigger share of the market than Tesco.

It would have combined revenues of £51bn and boast a network of 2,800 Sainsbury’s, Asda and Argos stores.

It will see Asda owner Walmart hold 42% of the new business and receive £2.97bn in cash, valuing Asda at £7.3bn.

However, Walmart will also book a two billion US dollar non-cash loss on the deal.

Picture: Getty. The combined operation would have revenues of £51 billion.