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Business & Finance Series: Expert Comment

Dr Naaguesh Appadu comments on Sainsbury's and Asda agreeing to merge

Merger of two supermarket giants would see them control almost a third of the UK grocery market.


Dr Naaguesh Appadu said:

"This deal is about market share. Neither Sainsbury’s nor Asda can afford to stay quiet. You just have to look at the grocery sector right now: Tesco has acquired Booker and Morrisons supplies products to Amazon. It’s a competitor’s market right now. It should be noted that both companies will find it hard to grow organically at the pace of other competitors and hard to keep pace with the market share of Tesco. Therefore, it is crucial that both companies show their leadership in terms of groceries for this merger to be successful.

"This deal with see the consumer win two-fold. First, customers will be able to access more products and second, they’ll enjoy lower prices (reports have stated 10%) on common products due to competition on suppliers. It will be interesting to see how this plays out in terms of competition, now that executives have stated there are no plans to close Sainsbury's or Asda stores."

Dr Naaguesh Appadu is a Research Fellow at Cass Business School and a member of the Mergers & Acquisitions Research Centre (MARC).

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