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00:00:01
>> The UK's second largest supermarket, Sainsbury's, has agreed to forge a pact with Walmart's Asda. It aims to create Britain's grocery leader by market share, overtaking current number one supermarket chain Tesco. Reuters Paul Sandle is following the story in London.>> Well, Sainsbury's and Asda are calling it a merger, but Sainsbury's will have the biggest shareholding.
00:00:24
They are paying money to Walmart, Asda's parent, although they will retain an equity stake. And all the top management will come from Sainsbury's, so it is pretty much a takeover.>> Sainsbury's set to acquire Asda for $10 billion. The deal could help it battle growing competition from German discounters Aldi and Lidl as well as online rival Amazon.
00:00:44
Sainsbury's CEO, Mike Coupe, set to run the new entity with both brands set to continue to operate. The cash and shares deal could also provide a potential exit route for Walmart, as Asda, which it bought in 1999 for over $9 billion, has been struggling to grow over the last 5 years.
00:01:03
Now the US giant will get 42% of the newly combined business, which is valued at over $18 billion. The news has shaken up the retail sector, with Sainsbury's shares jumping as much as a fifth in early Monday trading, hitting their highest in four years. The company argues it will also be good news for consumers.
00:01:25
Sainsbury's pledging to cut prices saying the deal will allow it to make savings of up to $700 million. But regulators could see things differently.>> But could actually be blocked entirely by the regulator or, otherwise, they will take action to make sure there were not monopolies in local areas.
00:01:45
It could mean that hundreds of stores have to be disposed of to rivals to get this through.>> They're only saying Monday that it was likely to review the deal.