Key facts
- Sainsbury’s and Morrisons held merger talks this year.
- The discussions were exploratory and are believed to be over.
- A merger would have created a business with 23.6% market share, behind Tesco's 27.8%.
- Morrisons was bought by Clayton Dubilier & Rice in 2021 and carries over £7bn in debt.
- Lidl has overtaken Morrisons in market share.
- Asda, majority owned by TDR Capital, could also be involved in future talks.
Sainsbury’s and Morrisons, two of the UK's largest supermarket chains, held exploratory merger talks this year to discuss a potential multibillion-pound deal. The negotiations are believed to have concluded, and the companies are not currently engaged in live discussions.
Morrisons, which was acquired by US private equity firm Clayton Dubilier & Rice in 2021 for over £7 billion, has since faced market share challenges, with German discounter Lidl surpassing it. A merger between Sainsbury’s and Morrisons would have created a combined entity with a 23.6% market share, still trailing behind market leader Tesco, which holds 27.8%.
Any such deal would have faced significant scrutiny from the Competition and Markets Authority (CMA), which previously blocked a proposed merger between Asda and Sainsbury’s in 2019 due to competition concerns. The CMA could have required divestitures to approve a Sainsbury’s-Morrisons tie-up. Such a reduction in competition could also be politically sensitive amid ongoing food inflation.
Clayton Dubilier & Rice is reportedly open to a merger involving Morrisons, and Asda, majority-owned by TDR Capital, has also been mentioned as a potential party in future deal talks. Sainsbury's shares were flat on Monday afternoon, having fallen 3% year-to-date, while Tesco's FTSE 100 rival has risen 6%. Sainsbury's, which employs around 140,000 people, holds a 15.2% market share.