Sainsbury’s and Morrisons merger talks this year would have created a 23.6% UK grocery business, but the discussions are believed to no longer be live. For shoppers, the point is not a completed deal but a potential shift in who sets prices, store strategy and market share across a sector already tightly contested.
23.6% versus Tesco’s 27.8%
23.6% was the combined market share a Sainsbury’s and Morrisons tie-up would have reached, according to analysts at Worldpanel by Numerator. Tesco still holds 27.8% of the market, so the proposed combination would have remained smaller than the UK leader, but it would have changed the scale of the second tier in a single move.
15.2% is Sainsbury’s own share of the market, while Morrisons has been losing ground after a difficult stretch under Clayton Dubilier & Rice, which bought it in 2021. That buyout loaded Morrisons with more than £7bn in debt on its balance sheet, and the chain has since struggled to grow as fast as rivals. Lidl has already overtaken Morrisons in market share this year.
Financial Times and Sky reported talks
This year, Sainsbury’s held exploratory merger talks with Morrisons, with Financial Times and Sky reporting that the negotiations were only preliminary. The move sat within a pattern the grocery market has seen before: consolidation discussions tend to surface when scale, debt and pricing pressure collide in the same quarter. Sainsbury’s employs about 140,000 people, so any tie-up would also have reached deep into store operations and head-office structures.
2019 is the key comparison point. Asda and Sainsbury’s almost joined forces in a £7bn deal that the Competition and Markets Authority blocked after saying it would reduce competition and raise prices for customers. Any Sainsbury’s and Morrisons merger would almost certainly have faced the same scrutiny, and the regulator could have demanded store sales before approving it.
Competition and Markets Authority review
£120m was the price Sainsbury’s agreed to accept for Argos in the summer, after buying the business for more than £1bn a decade earlier. That disposal shows how Sainsbury’s has been reshaping its balance-sheet options while the grocery market shifts around it. Monday also brought fresh evidence of the pressure on Morrisons’ owner: Lidl GB reported a 10% jump in annual revenue to more than £13bn and said pre-tax profits at its British arm rose by 30% to £245.5m.
The talks having stopped matters because the structural hurdle has not changed. Morrisons in a live merger would still face competition review, and a deal that lifted combined share to 23.6% would be examined against Tesco’s 27.8% lead and the earlier CMA warning that fewer rivals can mean higher prices. If the businesses return to the table, they would have to justify both the valuation and the route through the regulator before anything moved beyond another exploratory round.
