At least 73 supermarkets could be sold off in order for Sainsbury’s proposed merger with Asda to be approved by the UK’s competition watchdog, new research indicates.
According to Maximise UK, a firm that specialises in identifying the best locations for stores, around six per cent of the new Sainsbury’s-Asda entity’s supermarkets were at risk.
And the areas where stores would be most under threat were the south-east and the north-west of England.
Sainsbury’s and Walmart-owned Asda first unveiled details of its proposed £12 billion mega merger last week.
The deal, which could see the new supermarket group become the largest in the UK in terms of market share, is now poised to face scrutiny by the Competition and Markets Authority (CMA).
The CMA said the deal was “likely to be subject to review” and that it would assess whether it could reduce competition and choice for shoppers.
While the CMA would not comment in advance of the probe, analysts have since predicted that the watchdog could force Sainsbury’s and Asda to shutter or sell off some stores in order to meet their requirements for the merger to go ahead.
However, an exact figure is not yet known and analysts have shied away from providing estimates due to the complexities of the proposed mega merger.
“The real focus will be on how Sainsbury’s and Asda’s main supermarkets operate at a local level and how they overlap,” Maximise UK founder David Haywood told BBC News.
“The CMA will be concerned about whether the deal reduces the number of competing brands within a 10 or 15 minute drive time.”
Haywood added that two-thirds of the Sainsbury’s and Asda stores caught in their overlap analysis and are typically more than 20,000sq ft.
“The key issue is who can actually acquire store locations of this size. They’re typically too big for an Aldi or a Lidl,” he said.
Maximise UK said that if the CMA were to take a more conservative view and exclude discounters Aldi and Lidl from its calculations, then the number of potential store disposals could leap to 245 – which could place the financial merits of the tie-up at risk.
While the CMA has included the German discounters in previous cases, they’ve were given a lower “weighting” because they don’t stock all of the products of their competitors.
Sainsbury’s chief executive Mike Coupe has previously insisted there won’t be any store closures as a result of the merger, and that if any stores needed to be sold off they would be done so as trading entities.