Asda, the UK supermarket chain, is said to be considering a bid to buy its rival supermarket chain J Sainsburys, although such a bid could break competition rules.
It is understood that the Wal-Mart owned retailer is consulting with the Competition Commission authorities to explore the possibility of a bid for Sainsbury’s, which would disrupt an offer from a private equity consortium, and the possible antitrust issues that would be created by a combination of the two supermarkets.
A tie-up between the two companies would combine 1,104 stores and create a serious UK competitor to Tesco, which has 1,252 outlets in Britain .
A consortium of private equity firms are believed to be close to making a 585p per share offer for Sainsbury’s over the next week.
The possibility of a bid by Asda has been discussed by analysts recently, but many retail watchers are still sceptical about the possibility. Talks between the trustees of the Sainsbury’s pension fund and the private equity bidders have increased the speculation circling the retailer.
An offer could be tabled by the end of next week if an agreement between Sainsbury’s trustees can be reached.
Richard Ratner, retail analyst at Seymour Pierce, believes the pension fund trustees could be seeking around £1.25 billion.
He said, “It is not clear whether it will be a ‘deal-breaker’, but the pension could turn out to be the fly in the ointment.”
John Longworth, group company secretary of Asda declined to comment on what was as “market speculation”.
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