Failed Asda merger costs Sainsbury’s £46m
Sainsbury’s has incurred costs of £46m over its failed merger with Asda, after the CMA blocked the deal over concerns that it would lead to “increased prices in stores, online and at many petrol stations across the UK”.
According to the ‘Big Four’ grocer, the figure is principally comprised of fees incurred in relation to deal preparation, integration planning and transaction financing.
The merger was said to be worth around £12bn and would have seen the grocer’s leapfrog Tesco as the country’s largest supermarket. However, in its final report published on 25 April the CMA found that UK shoppers and motorists would be “worse off” if Sainsbury’s and Asda were to merge.
Stuart McIntosh, chair of the inquiry group, said at the time: “It’s our responsibility to protect the millions of people who shop at Sainsbury’s and Asda every week. Following our in-depth investigation, we have found this deal would lead to increased prices, reduced quality and choice of products, or a poorer shopping experience for all of their UK shoppers.”
The news comes amid Sainbury’s latest financial update for the year ending 9 March 2019, which saw like-for-like sales slip by 0.2%, compared with the increase of 1.3% seen the previous year. Despite this, underlying profits increased by 7.8% to £635m during the period, which was driven by “solid” food performance.
Convenience and groceries online sales grew 3.7% and 6.9% respectively, with convenience “outperforming the market”. Supermarket sales also grew 1%, benefiting from the addition of Argos stores inside supermarkets.
Commenting on the results, Mike Coupe, group CEO, said: “I am pleased to report that we have increased profits, reduced net debt and increased the dividend. This is a testament to the hard work of colleagues across the business and I would like to thank them for their commitment during this year of change.
“I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change.”
