Asda-Sainsbury's merger in doubt amid competition concerns

Market share of UK supermarkets

"These are two of the biggest supermarkets in the United Kingdom, with millions of people purchasing their products and services every day".

Sainsbury's chief executive Mike Coupe told BBC Radio 4's Today Programme that he was disappointed with the CMA's announcement and said the decision was "fundamentally flawed".

At 1105 GMT, Sainsbury's shares were down 16.6 percent at 239.95 pence.

The proposed merger between Sainsbury's and Asda could be in jeopardy after the UK's competition watchdog said the tie-up could lead to a "poorer experience" for customers.

If approved, the deal would create a company with annual revenue of about $66 billion, more than 2,800 stores and a grocery market share of 31.2 percent.

"We therefore assume that the proposed merger will have to be abandoned - even though Sainsbury's and Asda may not openly accept the inevitability of that outcome at this stage".

Unfortunately for them, the light at the end of the tunnel turned out to be an oncoming train.

The CMA is consulting on the provisional findings and also the possible remedies, with responses due by March 13 and March 6 respectively.

More news: IS teen will not be allowed into Bangladesh

Britain's competition regulator has dealt a potentially fatal blow to Sainsbury's planned $9.5 billion (£7.3 billion) takeover of Walmart's Asda, saying it was unlikely the companies would be able to address its "extensive" concerns about the deal.

However, it added that it "currently considers that there is a significant risk that a divestiture will not be effective in this particular case".

The report also stated the two supermarkets may have to sell off a significant number of stores. Sainsbury's has underperformed the wider sector in recent years, while Asda has steadily improved. "This is a massive problem for any business that might be considering a transaction in the United Kingdom", he said.

Sainsbury's suffered a 15 per cent drop in its share price this morning after the grocer's £12bn proposed merger with Asda was thrown into doubt following a swathe of concerns raised by Britain's competition watchdog.

The CMA's Mr McIntosh said: "We have provisionally found that, should the two merge, shoppers could face higher prices, reduced quality and choice, and a poorer overall shopping experience across the UK".

"Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits". That covers 45% of Sainsbury's stores and 57% of Asda's.

Patrick O'Brien, UK retail research director for GlobalData, said the CMA's provisional findings had "devastated any prospect of the merger going ahead".

He added: "There's an incredibly delicate balance to be struck here, because the CMA is also concerned that if the supermarkets do sell enough assets to proceed with the merger, the combined entity may damage competition by being too weak, rather than too strong".

Related News:

Most liked

Walmart to host ‘Baby Savings Day’ this Saturday at select stores
From sippy cups to auto seats and pacifiers, Walmart hopes you'll be shopping with them this weekend. Many of stores participating are in Southern California.

Google's Hosting a Gaming-Related Keynote Next Month
More recently, Google has been testing a hardware gaming console for running the Yeti service, one of the people said. Google has always been on the fringe of mainstream games, hanging around but not quite making its presence felt.

Mandy Moore was 'drowning' while married to Ryan Adams
Besides, this is not even the first time she opens up about their troubled marriage, but this time , she went into more detail. Brettler, Adams denied that he "ever engaged in inappropriate online sexual communications with someone he knew was underage".

Epic halts Fortnite ads on YouTube after outbreak of videos exploiting children
Vlogger Matt Watson made the allegations in a video posted on YouTube that has been watched almost two million times. YouTube did not comment on advertisers suspending their spending.

Atletico Madrid seize advantage in bruising Champions League first leg against Juventus
We took the game to where we wanted it to be. "Incidents decide games, we knew they were very risky on set plays and we should've been more focused.

Claire Williams must share blame for team's catastrophic vehicle failure
All the other teams finished their cars on time, and we did that as well for over 40 years. Completing that inquest anyway has not happened at Grove yet.

Trump to visit Japan twice in months after North Korea summit
The administration has previously said that sanctions will remain in place until North Korea's complete denuclearization. Stephen Biegun is expected to hold talks with his counterpart Kim Hyok Chol, who arrived in Hanoi on Wednesday.

Stockpiling Medicine Ahead of Brexit? Ireland's Deputy Prime Minister Says Please Don't
We will bring it to second stage next week, committee stage the following week, then move to the Seanad after that. She said they should "move beyond what divides us" and sacrifice "personal preferences" for the national interest.

Even in her exit, Bishop sends a message and makes her mark
FORMER foreign minister Julie Bishop has announced she is quitting politics altogether after almost two decades in Parliament. The PM referred to Bishop as "a good friend" whose judgement and insight he valued and appreciated throughout his career.

Harry Kane back in training with eye on return date
The England captain has been sidelined with an ankle injury he suffered in Tottenham's defeat against Manchester United on 13 January.

At Least 69 People Killed in a Fire in Bangladesh's Capital
Haji Abdul Kader, whose shop was destroyed, said he only survived the blaze as he had left to go to a pharmacy. The flames raced through four adjoining buildings, which were also used as chemical warehouses.

Vivo V15 Pro launched in India at ₹28,990: Full specifications, offers
It will be made available both in online and offline store with pre booking starting today and delivery commencing from 6th March. Since these are AI-powered, they come with additional features that include - AI Body shaping to AI Portrait Lighting modes.

Gwyneth Paltrow wants $US1 from counterclaim against retired doctor over ski collision
Retired optometrist Sanderson is seeking $3.1m in damages after he claims he was left with concussion and four broken ribs. The actress said that during the brief encounter, Mr Sanderson apologised and assured her that he was not hurt.

Former Colorado NFL player gunned down over parking spot with neighbor
There will be extra counselors at Hinkley High School this week for students and staff, the district said. "We will miss him". Cunningham was shot by his neighbor after an argument over a parking spot, the Arapahoe County Sheriff's Office told 9 News .

Shark DNA Could Cure Cancer, Other Human Illnesses
They have evolved numerous molecular changes in genes linked to DNA fix and damage tolerance, the scientists found. Shivji's group also found evolutionary adaptations were linked to the white shark's rapid wound healing ability.