Sainsbury’s agrees £3.5bn finance package for proposed Asda merger

Supermarket chain J Sainsbury said this morning it has successfully agreed a financing package of £3.5bn in relation to its proposed acquisition of rival Asda.

Chief executive Mike Coupe said: “”The market remains competitive. However, we have the right strategy in place and our proposal to combine Sainsbury’s and Asda will create a dynamic new player in UK retail, with the scale to give customers more of what they want today and create a more resilient and adaptable business for the future.

“The financing has been raised on attractive terms, reflecting the confidence of the lending banks in the outlook for the proposed combined business.”

In a trading update, the retailer posted a 0.8% rise in first-quarter sales, excluding fuel after saying that price cuts had attracted more customers.

On a like-for-like basis, sales in the three months through June rose 0.2%.

Grocery sales grew 0.5%, while general merchandise sales grew 1.7%, which the company said outperformed the market.

Coupe said: “I am pleased with our progress in the quarter. The headline numbers reflect the level of price reductions we have made in key areas like fresh meat, fruit and vegetables since March. Our price position has improved and customers have responded well, resulting in a continuation of the improved volume trend we saw in the second half of last financial year. ”