Each-way bet

27 March 2007 By John Foley Follow @johnsfoley

A combination of WalMart’s UK unit with rival Sainsbury would be an instant marketleader. But that might promote, not limit competition. Even if regulators eventually nix the idea, the lengthy hooha would give Asda an ideal opportunity to grab Sainsbury s market share.

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Asda, the UK operation of food retailer WalMart, is considering whether or not a bid for rival J Sainsbury would make sense, according to the Times. Sainsbury's already faces a potential offer from a consortium of buyout groups including Blackstone, CVC and TPG.

Asda and Sainsbury's would have a combined national market share of 33%, based TNS Worldpanel data for the three months to February 2007. That would catapult a combined group above marketleader Tesco, whose share of the market is 31%.

The Competition Commission is already evaluating whether the concentrated structure of the UK grocery sector penalises consumers. In 2004, when Wm Morrison bought rival Safeway, it forced them to sell 18% of their stores to maintain a competitive balance.

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