LONDON—Walmart Inc. is in advanced talks to merge its U.K. grocery chain Asda Group Ltd. with rival J Sainsbury PLC, as Britain's supermarket sector faces pressure to gain scale in a bid to fend off aggressive discounters.
In a brief statement Saturday, Sainsbury, which has a market value of $8.16 billion, confirmed the tie-up talks and said that it would make a further announcement Monday.
The talks come after rival grocer Tesco PLC agreed last year to acquire Booker Group PLC, the country’s largest food wholesaler, for £3.7 billion ($5.1 billion), catapulting it from the U.K.’s biggest supermarket chain to its largest food business and allowing it generate new avenues of revenue.
Like that deal, any merger between Asda and Sainsbury would likely draw antitrust scrutiny amid worries that consolidation could give the combined entity greater power to maintain or raise prices for food.
Walmart agreed to acquire Asda in 1999 for about $10.8 billion, as part of the U.S. retail giant’s goal at the time to double its international operations. But Asda has struggled to increase sales over several recent quarters as it loses market share to budget retailers such as Aldi and Lidl.
Write to Ben Dummett at ben.dummett@wsj.com
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