Property implications of proposed Sainsbury’s-Asda merger could be huge

Len Rosso, head of industrial & logistics at Colliers International said: “The integration of Sainsbury’s and Asda’s respective industrial infrastructures across the country will not only achieve significant economies of scale, and therefore big savings, but there is also a great opportunity to reduce their supply chain costs.

“The phenomenal growth of industrial market in the last few years as a result of eCommerce means their large warehouse portfolios could be worth more than their retail units, providing real cash benefits. With industrial yields at historic lows, these assets could provide better returns to investors than their shops.”

Sainsbury and Walmart have agreed terms in relation to a proposed combination of Sainsbury's and Asda.

The combination will result in Walmart holding 42% of the issued share capital of the Combined Business and receiving £2.975 billion of cash (subject to customary completion adjustments), valuing Asda at approximately £7.3 billion on a debt-free, cash-free and pension-free basis. At the time of completion of the Combination, Walmart will not hold more than 29.9% of the total voting rights in the Combined Business.

The Combination will create one of the UK’s leading grocery, general merchandise and clothing retail groups, with combined revenues of c.£51 billion for 2017.