Sainsbury’s and Morrisons ‘held talks this year’ on multibillion-pound merger

Deal would have created a supermarket with a market share of 23.6%, still well behind Tesco’s 27.8%

Sainsbury’s held merger talks with rival Morrisons this year to discuss a multibillion-pound deal that would have been the biggest shake-up for UK supermarkets in decades, according to reports.

Morrisons, which was once one of the big four UK grocers alongside Sainsbury’s, Tesco and Asda, was bought by the US private equity firm Clayton Dubilier & Rice in 2021.

A merger between Sainsbury’s and Morrisons would have created a business with a 23.6% market share, putting it still some way behind Britain’s biggest retailer, Tesco, which has 27.8% of the market, according to analysts at Worldpanel by Numerator.

The CMA would have almost certainly reviewed any merger between Sainsbury’s and Morrisons, and could have required the former to sell some of its stores to gain approval for any deal.

Clayton Dubilier & Rice, however, is open to a tie-up between Morrisons and another major supermarket, according to Sky. It reported that Asda, which is majority owned by the private equity firm TDR Capital, could also be drawn into deal talks.

Sainsbury’s, which employs about 140,000 people, is the second biggest grocer in the UK by market share at 15.2%.

It agreed to sell Argos for £120m in the summer to allow it to concentrate on its core food business, a decade after buying the retail chain for more than £1bn.

The company said pre-tax profits at its British arm rose by 30% to £245.5m in the year that ended in February as shoppers sought out cheaper fresh meat, fruit and vegetables, as well as its Deluxe upmarket food range.

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