Seven years have passed since ebullient Sainsbury’s boss Mike Coupe signed his own departure note when he was caught by an ITV news camera singing ‘We’re in the money’ after announcing a £12billion merger with rival Asda.

The hubristic misstep, for which Coupe apologised, cost him his job and the much-vaunted deal failed after the Competition & Markets Authority (CMA) ruled unification of the country’s second and third largest grocers would ‘lessen competition, raise consumer prices, and reduce product quality and choice’.

Yet that may not be the last word. Dramatic changes in Britain’s grocery market and a change at the CMA have raised expectations that a deal between Sainsbury’s and struggling private equity-owned Asda may be back on the table.

The prospects have been raised by Sainsbury’s decision on Friday to sell off its underpowered Argos business to a consortium led by veteran retailer Richard Pennycook for £120million, having paid £1.4billion for the firm in 2016.

But the pain of the Argos sale to Sainsbury’s pales in comparison to the troubles faced by Asda, which has suffered a calamitous loss of competitiveness and market share since it was sold to a consortium of private equity firm TDR and petrol station tycoons Mohsin and Zuber Issa for £6.8billion in 2021.

The new owners made a fatal error from the outset. Asda had been market leader for fuel pricing, but the cost of its petrol was raised by a few pence to help meet debt interest repayments, sending Asda customers to market leader Tesco and Sainsbury’s in droves. 

The timing was also less than ideal with Asda’s owners inheriting its debt pile just as interest rates rose to combat post-Covid inflation.

This, with a surge in sales at German discounters Aldi and Lidl, has seen Asda’s market share fall from 14.9 per cent in 2019 to 11.5 per cent, with Aldi close to overtaking it as Britain’s third biggest grocer.

Aldi and Lidl are also forcing other retailers to keep prices low, piling pressure on profit margins.

Veteran executive chairman Allan Leighton is in a titanic struggle to turn around Asda’s fortunes.

Losses in the year to December 2025 catapulted to £1 billion after the group reverted to lower prices to tempt back consumers. 

Revenue and same-store sales fell, and the owners took a write-off of £344million against its property portfolio, once valued at £8 billion.

The food offer at Marks & Spencer, the biggest opener of food halls, has also added an upmarket, innovative competitor to the mix. As a result, senior sources close to Sainsbury’s suggest now might be right for a fresh approach to Asda.

A tie-up could play to both firms’ strengths with most Sainsbury’s shoppers in the well-off south and Asda’s greater reach in the north.

Sources close to Sainsbury’s say it would be surprising if the supermarket’s investment bank UBS was not looking at the possibility of coming back for Asda given the diminished state of the brand.

And TDR is understood to be increasingly impatient to sell off Asda. The UK’s moribund stock market has also made it unlikely the group will pursue a listing.

A fresh attempt to create a strong Sainsbury’s-Asda pairing – driven by price-cutting and loyalty cards – is also seen as less likely to hit a brick wall with the CMA.

As part of her growth agenda former Chancellor Rachel Reeves replaced the chairman of the CMA Marcus Bokkerink with Amazon emigre Doug Gurr. 

Long drawn-out investigations – such as the one into the previous Sainsbury’s-Asda merger proposal – were seen as a constraint on commerce.

Moreover, it was felt the CMA failed to take note of the inroads online shopping groups such as Ocado and Amazon were making.

Gurr’s background in the tech sector would also be expected to foster a broader approach than the previous store, consumer and geographical mapping techniques used to assess grocery deals.

A combined entity might provide a better counterweight to Tesco, which dominates the market with a 28.2 per cent share, according to the data group Worldpanel.

Sainsbury’s is in a distant second place with a market share of 15.2 per cent. With Asda’s 11.5 per cent, the combined group would be snapping at Tesco’s heels with a 26.7 per cent share. 

As a result, the timing for a fresh Sainsbury’s tilt at Asda may look propitious.

And Sainsbury’s chairman Martin Scicluna may be open to a deal given his track record at insurer RSA, where as chair he presided over the sale of the insurer to a Canadian rival.

But chief executive Simon Roberts may baulk at Sainsbury’s trying another transformative deal.

Retail consultant and ex-Asda buyer Ged Futter is among those sceptical of a tie-up.

‘After six years at the helm, Roberts must be coming to the end of his stint as chief executive. I can’t see him wanting to be involved in an acquisition. Asda is not a good fit, and is struggling,’ Futter said. 

‘Any potential purchase of Asda just plays into Tesco’s hands.’