Sainsbury’s faces a hit of about £50 million after the competition regulator blocked its £12bn merger with rival supermarket Asda over fears that the deal would lead to price rises (The Times £). The UK’s competition watchdog bared its teeth on Thursday by torpedoing Sainsbury’s £10bn merger with Asda, blocking a deal outright for the first time since the regulator’s inception five years ago (The Telegraph).The news marks the first time since the regulator was formed in 2014 that it has blocked a takeover before its completion (The Times £). Trade unions and supermarket suppliers welcomed the decision (The Guardian). The ruling prompted a bitter response from the chains, with Sainsbury’s share price falling nearly 5% on Thursday to leave it more than 18% down in the year to date (Sky News).
One crucial miscalculation was that the two retailers had expected the regulator to focus on local markets and find that German discounters Aldi and Lidl were bona fide competitors (The Financial Times £).
Sainsbury’s boss Mike Coupe is fighting for his job after the collapse of the supermarket’s £12billion merger with Asda (The Daily Mail)
Coupe must now reassure investors that his management team have got a Plan B. And they have got just days before they face investors (The Times £). Having spent the past 11 months loudly pleading that Sainsbury’s needed the deal to go through to compete with the discounters, suddenly Coupe needs to convince the City that the supermarket can survive on his own (The Telegraph). Retail commentators seem to agree today that the group must put all thoughts of mergers and acquisitions behind it now and ‘refocus on retail basics’ (The Daily Mail)
Failed merger leaves Sainsbury’s investors fearing there is no plan B, writes The Guardian. “To shake off the sense he is past his sell-by date, Coupe needs to come up with a different song – and fast.”
Shareholders will be unforgiving of Mike Coupe’s attempt to escape the heat of competition by seeking a merger with Asda, which has cost Britain’s oldest established grocer a year of progress. New chairman Martin Scicluna will have little choice but to speed succession planning. (The Daily Mail)
The CMA’s findings make Mr Coupe’s tune, and his apparent unwillingness to change it throughout the regulatory process, look extremely ill-judged. [However] Coupe’s only failure was to utterly misjudge his audience. Under new chairman Andrew Tyrie the dress circle at the CMA was always going to be more like the backbenches at Westminster: highly politicised but lacking in expertise. In fact, there was no one with any retail specialism on the Sainsbury’s inquiry panel. (The Financial Times £)
Sainsbury’s simply couldn’t make a case its Asda deal was good for shoppers, writes The Telegraph. “From the start, Sainsbury’s was vague in its pledges around price cuts. There were other concerns too, about petrol prices and online sales. So what, frankly, was in it for consumers?”
At last – Britons are put before bosses: The stopping of the Sainsbury’s-Asda merger should be applauded, says Alex Brummer in The Daily Mail.
The deal was doomed from day one and all but killed off in February, when the Competition and Markets Authority came to a predictable conclusion: any tie-up that turned the grocery market into a duopoly with Tesco cannot be in consumers’ interests. (The Times £)
Sainsbury’s Asda Defeat Is a Victory for Germany, writes Bloomberg. “The upstart discounters will only get stronger. British supermarkets will have to continue to do their best to compete, with one potential response — combining as a way to cut costs and ease the pressure from price-slashing rivals — shut off to them.”
Merger failure leaves Asda’s doors open for Amazon to knock, writes Sky News. “It would be no surprise to see private equity bidders dusting off spreadsheets and taking a look at a possible bid for Asda - although it can be argued that, if even the mighty WalMart cannot thrive in the intensely competitive UK grocery market, nobody else can. Except, perhaps, another big US company that has plenty of financial firepower and which has recently extended its tentacles into grocery retail.”
The merger with Sainsbury’s gave Asda’s owner Walmart an elegant route to eventually withdraw from the UK but now the American giant must find another exit (The Times £).
Amazon plans to cut shipping times to one day for members of its Prime programme, in a move that will drive up its spending and put further pressure on its bricks-and-mortar rivals (The Financial Times £). Amazon posted its fourth consecutive record quarterly profit last night but gave investors some cause for concern with a disappointing outlook (The Times £).
During a call with investors Amazon announced that it plans to spend $800m in the second quarter to give US Prime members access to free shipping in one day instead of two — gouging earnings in the process. “The rest of the online retail world is catching on to the benefits of offering fast delivery of goods. If Amazon wants to keep its lead it has to go one better.” (The Financial Times £)
Duke of Westminster’s agritech business looks to change farming, writes The FT. Wheatsheaf head says traditional cattle rearing is ready for innovation. (The Financial Times £)
Starbucks is planning to bring coffee delivery to another 15 cities in China as the US chain faces off against fast-growing rival Luckin Coffee in the world’s second-biggest economy. (The Financial Times £)