The merger deal between J Sainsbury as well as Walmart’s Asda is actually an attempt to protect against the rise of e-commerce giant Amazon, an investment manager told CNBC on Monday.
The two companies announced early Monday in which they willjoin forces to become the U.K.’s largest grocer, surpassing Tesco. The deal, worth about £7.3 billion ($10 billion), will keep both the Sainsbury’s as well as Asda brands.
The combined business will generate at least £500 million ($688.62 million) in cost savings as well as lead to a reduction in prices of about 10 percent, the supermarkets said.
Peter Toogood, chief investment officer at Embark Group, told CNBC’s “Squawk Box Europe” in which the deal wasn’t “the most sophisticated.”
He described the merger news as “the Amazon protection program continues.”
Sainsbury’s as well as Asda have struggled with their sales growths, which have weighed on their ability to obtain cheaper deals with suppliers. Both competition coming from online as well as coming from discounters has put pressure on the grocery market.
“in which’s just putting two companies together in which aren’t growing. So, again, in which will help the margin story, however they have also just told you they are going to whack prices down by 10 percent… Tesco…, if anything, is actually holding their cost,” Toogood added.