Sainsbury's Considered Merger with Rival Morrisons
Talks between the two British supermarket giants reportedly occurred between late 2025 and early 2026 but have since ceased.
Sainsbury's held discussions with its rival Morrisons regarding a potential merger, though the talks concluded earlier this year. The negotiations reportedly took place between November 2025 and February 2026, according to the Financial Times. No active discussions are currently underway between the two supermarket chains.
A combination of Sainsbury's and Morrisons would represent a significant consolidation in the UK grocery market, creating an entity with a market share of approximately 23.6 percent. This would position it as a stronger competitor to market leader Tesco, which currently holds 27.8 percent of the market, according to Worldpanel data.
Such a large-scale merger would likely face intense scrutiny from the UK's competition watchdog. For regulatory approval, Sainsbury's would likely be required to divest a number of its stores. The Competition and Markets Authority (CMA) previously blocked Sainsbury's proposed £7.3 billion takeover of Asda in 2019, citing concerns that it would reduce competition and potentially lead to higher prices for consumers.
Morrisons, which is owned by the private equity firm Clayton Dubilier & Rice, is reportedly open to exploring a deal with another major competitor. The grocer has faced challenges in customer retention since its £10 billion acquisition in 2021, which was financed through significant debt.
Both Sainsbury's and Morrisons declined to comment on the reports. The increasing market presence of German discount chains Aldi and Lidl, which together hold nearly 20 percent of the market, has intensified competition. This dynamic could potentially influence future regulatory decisions should merger discussions be revived, as it might mitigate concerns about reduced market competition.
These merger talks come shortly after Sainsbury's agreed to sell its general merchandise division, Argos, to Swift Partners for £120 million. Sainsbury's had originally acquired Argos for £1.4 billion in 2016.
In its efforts to compete with discounters, Sainsbury's has been focusing on its core food business, implementing strategies such as its Nectar loyalty scheme and promoting value offerings to attract customers.