By Saeed Azhar and James Davey
DUBAI/LONDON (Reuters) - Qatar Investment Authority (QIA), the biggest shareholder in J Sainsbury Plc, is supportive of merger talks between the British supermarket chain and rival Walmart Inc's Asda, a source familiar with the matter told Reuters.
Sainsbury's statement regarding the discussions on Monday will reflect QIA's position on the matter, the source said.
Sainsbury's declined to comment on Sunday.
QIA, one of the 10 largest sovereign funds in the world, has a 22 percent stake in Sainsbury's, which said on Saturday it was in advanced discussions regarding a combination of the UK's No. 2 and 3 grocers. It has tried to buy Sainsbury's before with other partners.
Supermarkets' market share graphic: https://bsmedia.business-standard.comtmsnrt.rs/2cZQkWZ
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Britain's big grocers, including No. 4 player Morrisons, have been losing share to German discounters Aldi and Lidl and must also deal with growing demand for internet grocery shopping and the march of Amazon.
Tesco last month moved to strengthen its grip on the UK food sector, completing the 4 billion-pound purchase of wholesaler Booker.
Bernstein Research said in a research note the Tesco-Booker deal made Sainsbury & Asda fall further behind on scale.
Together their combined market share would slightly surpass Tesco's market share, which would drive buying synergies, it said in the note.
The source, who declined to be identified because of the sensitivity of the matter, did not comment on whether the deal would dilute QIA's stake in Sainsbury's or the size of its potential stake in the combined group.
QIA's chief executive was recently quoted as saying the fund has not been liquidating foreign assets to support the Gulf state's banking system since other Arab countries imposed an embargo on Qatar last June.
Sheikh Abdullah bin Mohamed bin Saud al-Thani said the fund, with assets unofficially estimated at about $300 billion, did not need to sell foreign assets to raise cash, and indeed was about to announce "the deal of a lifetime".
(Reporting by Saeed Azhar and James Davey; Editing by Elaine Hardcastle and Hugh Lawson)