LONDON, April 30 (Reuters) - British shares closed slightly higher on Monday, but the planned merger between Sainsbury's and Asda, the United Kingdom arm of Walmart, sent shockwaves through British retail stocks as investors sought to adjust to a potentially game-changing overhaul of the industry.
Coupe described the deal as being "designed for a new era" of retailing, bringing scale in clothing and general merchandise.
Analysts said the deal was a bet that recent changes in the retail industry - including the rise in online shopping, hard discounters and Tesco's purchase of Booker - would ease any opposition from competition regulators.
Sainsbury's is valued at around £5.9 billion.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "There are clear benefits from the two supermarkets joining forces, particularly when it comes to leveraging their combined buying power, which should result in both lower prices for customers and higher margins for the business".
The combination joins Asda's strong presence in northern England with Sainsbury's larger operation in the south, creating a company with more than 2,800 stores across the country and 51 billion pounds of annual revenue.
"Having worked at Asda before Sainsbury's, I understand the culture and the businesses well and believe they are the best possible fit". In addition, any overlap between the brands would undermine their respective propositions and result in the cannibalisation of sales.
Following the clearance of antitrust regulators and the successful completion of the deal, Walmart will hold a minority stake of 42 percent, get almost GBP3 billion in cash, and have voting rights up to 29.9 percent. At the time of completion of the combination, Walmart will not hold more than 29.9% of the total voting rights in the combined business.
But Walmart has been working to adapt to the various landscapes and differing consumer behaviours, and teaming up with local partners when it realizes it can't go alone.
Kevin O'Byrne, chief financial officer at Sainsbury's, told CNBC's "Squawk Box Europe" that the merger "allows us, particularly in a very competitive market online and with discounters, to give much greater value to our customers and that's very important". He sees the two companies benefiting as the merger will lower buying and overhead costs and provide an opportunity to make use of Walmart's technology.
Mike Coupe, CEO of the UK-based supermarket chain Sainsbury's, was caught on tape singing "We're in the money" before a live TV interview on Monday.
"We think it is a great deal all around". Sainsbury's said the deal will produce costs savings of at least 500 million pounds ($688 million) due to increased efficiency.
Meanwhile, Sainsbury's booked a return to profit in the period with underlying profit before tax rising 1.4% to GBP589m from GBP581m in the prior year.
The total sales from Walmart International reached $118.07 billion in 2018 fiscal, a slump of about 14 percent from sales of $136.5 billion in the fiscal year ended 2014.