is in advanced talks to its British food company Asda Group Ltd. to merge with rivals
PLC, the industry's latest move to give aggressive discounters a boost.
In a brief statement, Sainsbury confirmed on Saturday, with a market value of $ 8.1
Like this deal, any merger between Asda and Sainsbury would likely result in antitrust investigations amid fears that consolidation could give the merged entity more power to maintain or increase food prices.
Together, Sainsbury and Asda, according to Kantar Worldpanel, have a market share of over 30%, overtaking Tesco.
Due to fierce competition and large numbers of online shoppers, the UK food market is considered by many retail executives to be the toughest in the world.
In recent years, Tesco, Sainsbury and competitor Wm Morrison Supermarkets PLC have poured money into their operations, but Walmart held back. It hit a number of Asda's top executives, including its chief of operations, e-commerce chief and two chief financial officers, and put them in positions in their US business, weakening Asda's talent pool, analysts say.
Walmart agreed to acquire Asda in 1999 for approximately $ 10.8 billion, as part of the US retail giant's goal of his time to double its international activities.
The United Kingdom, where Walmart operates around 600 Asda stores, is the largest foreign market in Bentonville, Arkansas. But it was also the most problematic, as the sale was shaken by the competition of the German discounters Aldi and Lidl. The pair has kept prices low by prioritizing fast deliveries, efficiency and high revenues at the expense of supply diversity and customer service. Aldi and Lidl daily accept a sleek range of mainly private label products, often with the look and feel of well-known branded products.
Walmart managers have since October indicated that Asda this is not very profitable, they see it as a good source of cash flow. Still in February, Walmart Chief Executive
said he sees the UK market as similar to the home market of the retailer in North America – "largely expanded."
Sainsbury, for its part, has just recently digested its 1.4 billion pound acquisition of Argos owner Home Retail Group in 2016, which sells everything from irons to furniture, to a strong sales network that Sainsbury uses to compete with Amazon.
Although Sainsbury usually sells to wealthier buyers, the chain has difficulty competing with Aldi and Lidl. In March, it was said it would lower the prices of 930 daily food products in its stores and online.
The talks between Walmart and Sainsbury were first reported by Bloomberg.
-Sarah Nassauer contributed to this article.
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