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Sainsbury: shares jump on Asda merger deal

(CercleFinance.com) - Sainsbury's London-listed shares jumped over 15% in early-morning trading today after the British retailer said that it plans to merge with Walmart's Asda.

The deal - intended to create a "dynamic new player in UK retail" - values Asda at approximately 7.3 billion pounds (around 8.3 billion euros) on a debt-free, cash-free and pension-free basis.

In a statement, Sainsbury said that Asda has experienced strong online growth - both in groceries and clothing

When the deal is complete, Walmart will hold no more than 29.9% of the total voting rights in the combined company, Sainsbury said.

The announcement comes as Sainsbury recently posted sales that are up 9% for the 52 weeks to 10 March 2018, with an underlying pre-tax profit that is up 1.4% at 589 million pounds for the same 2017/2018 fiscal year.

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