Merger talks between UK supermarket chains Sainsbury's and ASDA (Walmart)

Merger talks between British supermarket chains Sainsbury's and Asda are at an "advanced" stage, Sainsbury's has confirmed.

The two brands are expected to be retained should a merger go ahead.

Sainsbury's and Asda - a subsidiary of Walmart - are the second and third largest supermarkets in the UK.

The combined group would comprise 2,800 stores and would represent 31.4% of the UK grocery market - slightly more than that of market leader Tesco.

J Sainsbury plc released the following statement:
 

"Sainsbury's confirms that it and Walmart Inc. are in advanced discussions regarding a combination of the Sainsbury's and Asda businesses."

The deal would be worth £10bn (USD 13.8 billion). A further announcement is expected on Monday morning.

George MacDonald, editor of Retail Week, said the grocery industry had been shaken up by low-cost supermarkets such as Aldi and Lidl.

George MacDonald:
 

"So maybe this type of mega deal will get the go ahead by the Competition and Markets Authority."