Sainsbury’s and Asda could be forced to sell 245 stores if £15bn merger completes

Number of store disposals will depend on stance taken by competition watchdog

Retail experts are questioning how the firms will find buyers for some stores (Reuters)

Sainsbury’s and Asda will be forced to sell at least 73 supermarkets and could be made to dispose of as many as 245 across the UK if their proposed merger goes ahead, according to new research.

The supermarkets announced they were in talks about a potential £15bn tie-up at the end of April, and at the time, Sainsbury’s boss Mike Coupe said the deal would not result in any job cuts or store closures.

However, the transaction is facing scrutiny by the Competition and Markets Authority, which could force the combined group to sell stores in areas where competition is at risk.

The number of shops at risk is at least 6 per cent, or 73, of the companies’ combined store portfolio, according to David Haywood, founder of Maximise UK, a consultancy that identifies profitable new locations for retailers.

Mr Haywood told the BBC: “There hasn’t been a retail deal like this in more than a decade. The real focus will be on how Sainsbury’s and Asda’s main supermarkets operate at a local level and how they overlap. The CMA will be concerned about whether the deal reduces the number of competing brands within a 10 or 15 minute drive time.”

The estimate of 73 store sales is based on a scenario in which the CMA includes Aldi and Lidl as competitors to Sainsbury’s and Asda.

However, Maximise said that if the CMA takes a more hardline stance and excludes the discounters from its calculations, Sainsbury’s and Asda could be forced to dispose of up to 245 stores.

Mr Coupe has promised that any disposals the combined group has to make will be sold as trading entities, but Mr Haywood said this begs a greater question as to which company will take on the stores.

“”For me this is the real issue regarding these overlapping catchment areas,” says Mr Haywood. “Considering that 66 per cent of the stores caught in the overlap analysis have selling areas over 20,000 sq 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.”