Reasons behind the Merger of Sainsbury and Asda

FINANCIAL MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
A) Reasons behind the merger of Sainsbury and Asda ...............................................................1
B) Reasons for blocking the merger and its implications............................................................4
C) Bidding process when the company launches bid for another entity with the possible
defences........................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Mergers and acquisition could be defined as the consolidation of the companies. Mergers
refers to combination of 2 companies for forming a new company while the acquisition is the
process where one company is taken over by other company. It is an important financial aspect
in the corporate world. These events have great impact over the whole economy in case of big
companies. They also have impact over the financial and business operations of the consolidated
company. The present report is based over the merger of Sainsbury and Asda. The report will
cover the understanding about the reasons of merger taking place. It will also be providing the
reasons behind the blocking of the mergers of two companies and the implications of the issue on
the economy. Further the study will also be covering the bidding process when a launch by
company of a bid against other with the possible defences.
MAIN BODY
Mergers & acquisition are the terms used for describing consolidation of the assets or of
entire companies using different types of the financial transactions, it includes, mergers,
consolidation, acquisition, assets purchases and management acquisitions. Merger and
acquisitions are two different terms, where the merger refers to case where the two companies
come together for emerging as a single company and acquisition is the process where the one
company is acquired by other company (Kühnert and König, 2019). These are major aspects in
the corporate financial world. Companies generally go for mergers and acquisition to form a
single company combing two companies for creating more added value in comparison with that
of separated standing of entities. With objective of the wealth maximisation, entities always
evaluate the opportunities through mergers & acquisitions.
A) Reasons behind the merger of Sainsbury and Asda
Sainsbury and Asda are the mega business giants of Britain. Everyone is aware of the
critical phase of the companies during the recent years. Seeing the performance and need both
the companies were on the verge of merging. It is analysed from various news spread and the
facts behind the case. Before the news actually started floating about the merger of the two
companies, many observers were in of unexpected view of the mergers . It was confirmed after
the headlines about the deal of 15 billion was agreed by Sainsbury with parent company of Asda,
Walmart Inc. and stated both the supermarkets will be remaining intact.
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