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Calls for ?10bn-plus Sainsbury's-Asda deal to face competition probe

Sainsbury’s and Asda’s potential ?15bn mega merger is facing ­opposition from rival supermarkets over fears it will harm customer choice by shrinking competition in the UK grocery market. 
Britain’s second biggest supermarket is set to announce a colossal tie-up with Asda today, creating a retail giant with ?50bn sales, more than 2,000 stores, and a greater market share than industry leader Tesco. 
The Daily Telegraph understands Walmart, the US retail giant that snapped up Asda in 1999, would emerge as one of the biggest shareholders in the group with a 40pc stake if the deal goes ahead. 
The Sainsbury’s and Asda brands will also be kept as part of the deal, it is understood, with Sainsbury’s boss Mike Coupe becoming group chief ­executive and Roger Burnley remaining in charge of Asda. 
However, the proposed deal is facing intense pressure from politicians, unions and competitors over fears it may spark thousands of job losses, drive down choice and squeeze suppliers. 
Calls for ?10bn-plus Sainsbury's-Asda deal to face competition probe

Sainsbury's chief executive Mike Coupe
The competition watchdog is being urged to launch an immediate inquiry into the deal, and force Sainsbury’s and Asda to offload stores in areas where the group could gain a monopoly. 
“It is not good for customers to have that much concentration in the market,” a source at a rival UK supermarket said.
Calls for ?10bn-plus Sainsbury's-Asda deal to face competition probe

Sir Vince Cable has called on the competition watchdog to investigate a potential deal between Sainsbury's and Asda
“There are a number of ways in which customers could be affected and the question is going to be ‘are there going to be separate prices for Asda customers and Sainsbury’s customers if the goods are coming from the same place with different branding?’
“I think there will also be a lot of suppliers thinking ‘will I still have business with this company? And if I am going to have business then I will get asked to reduce my prices?’
“(Sainsbury’s-Asda) synergies will be in the buying, and its suppliers that will face the toughest deal of all.” Such a tie-up would see Sainsbury’s and Asda seize nearly a third of the UK market, trumping Tesco’s 28pc market share. 
Market share: How the grocery sector stacks up
However, analysts said the enlarged brand’s dominance could be diminished if it is forced to offload stores to satisfy competition concerns. Bruno Monteyne, the Bernstein analyst, said the deal could spark cost savings of ?600m, with the majority of the synergies coming from renegotiating terms with suppliers.
It is understood the combined firm would invest to drive down prices in a bid to coax bargain-hunting customers away from Aldi and Lidl. However, Clive Black, the Shore Capital analyst, said the cost savings could also be targeted at the supermarket’s back office functions, putting hundreds of jobs under threat.
How Sainsbury’s and Asda compare
Led by Mike Coupe since 2015, Sainsbury’s has about 150,000 staff and 1,400 stores - though more than half of them are smaller “convenience” outlets - with a bias towards locations in the south.
The chief executive - who had a stint at Asda in the early stages of his career - has previously made bold moves before which have shaken up the UK retail sector. One of the most notable was the ?1.4bn acquisition of Argos and Homebase-owner Home Retail Group two years ago, which has seen Argos outlets put into Sainsbury’s supermarkets.
Asda has 165,000 staff and about 650 stores, almost all of them supermarkets or superstores, with a focus on the north of England. The business is headed by Roger Burnley, who took the helm in January, and was previously retail and operations director at Sainsbury’s before being lured to Asda in 2016 as deputy chief executive.
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