Seven years after a proposed £12 billion merger between Sainsbury’s and Asda collapsed, sources close to Sainsbury’s say the idea of combining the two supermarkets may be back under consideration.
The original deal fell apart when the Competition and Markets Authority (CMA) ruled that merging Britain’s second and third largest grocers would lessen competition, raise consumer prices, and reduce product quality and choice. The announcement was overshadowed by an embarrassing episode in which then-Sainsbury’s chief executive Mike Coupe was filmed singing “We’re in the money” before the deal was formally announced. Coupe apologised and later left the company.
Asda’s troubled ownership
Since Asda was sold to a consortium of private equity firm TDR and petrol station entrepreneurs Mohsin and Zuber Issa for £6.8 billion in 2021, the supermarket has suffered a steep decline. Its market share has fallen from 14.9 percent in 2019 to 11.5 percent, with German discounter Aldi close to overtaking it as Britain’s third largest grocer.
The new owners raised Asda’s fuel prices shortly after taking over to help service debt repayments, driving customers to rivals Tesco and Sainsbury’s. Rising interest rates compounded the problem. Losses in the year to December 2025 reached £1 billion after the group cut prices in an attempt to win back shoppers. Revenue and same-store sales fell, and the owners wrote off £344 million against a property portfolio once valued at £8 billion.
Veteran executive chairman Allan Leighton is leading a turnaround effort, but TDR is understood to be increasingly impatient to exit the investment. A stock market listing is seen as unlikely given current conditions.
Changed landscape at the CMA
Sainsbury’s, which last week sold its Argos business to a consortium led by Richard Pennycook for £120 million, having paid £1.4 billion for it in 2016, holds a grocery market share of 15.2 percent. Combined with Asda’s 11.5 percent, a merged group would reach 26.7 percent, closing the gap on market leader Tesco, which holds a 28.2 percent share according to data group Worldpanel.
Sources close to Sainsbury’s say it would be surprising if the supermarket’s investment bank, UBS, was not examining the possibility. A regional fit is also cited: Sainsbury’s shoppers are concentrated in the south of England, while Asda has stronger reach in the north.
A changed regulatory environment is seen as another factor. Former Chancellor Rachel Reeves replaced CMA chairman Marcus Bokkerink with Doug Gurr, an Amazon executive, as part of a growth agenda. Gurr’s background in the tech sector is expected to encourage a broader view of competition that accounts for online grocery players such as Ocado and Amazon, which the CMA was felt to have underweighted in its previous assessment.
Sceptics remain
Not everyone expects a deal to materialise. Retail consultant and former Asda buyer Ged Futter said chief executive Simon Roberts, who has led Sainsbury’s for six years, was unlikely to want to take on a struggling acquisition at this stage of his tenure. Futter said Asda was not a good fit and that any purchase would play into Tesco’s hands.
