Top story
The Competition and Markets Authority (CMA) has referred the proposed merger between Sainsbury’s and Asda for an in depth review because of concerns over the impact on hundreds of local areas.
The CMA confirmed that it has completed its Phase One investigation into the merger announced in April, and said that it raises “sufficient concerns” for a more thorough review.
Announcing the extended investigation, the regulator pointed out that the two supermarkets’ stores “overlap in hundreds of local areas, where shoppers could face higher prices or a worse quality of service”.
The regulator will also investigate other impacts of the merger, including those relating to fuel, general merchandise such as clothing, and “increased buying power over suppliers”, the CMA said.
It had been widely expected that the CMA would start the Phase 2 investigation, as both Sainsbury’s and Asda had called for the mega-merger to be fast-tracked.
The Times reported last month that the supermarkets could have to dispose of stores in up to 300 locations across Britain if the two grocers are to succeed in convincing regulators to approve their proposed merger.
The in-depth investigation will be led by an inquiry group chosen from the CMA’s independent panel members. This will be chaired by Stuart McIntosh, with the other members being Roland Green, John Thanassoulis, Richard Feasey and Claire Whyley.
The group will gather information through customer surveys and discussions with retailers, suppliers and industry bodies.
A statement highlighting in detail the specific issues the CMA expects to investigate will be published in the coming weeks, and members of the public and interested groups will have the opportunity to give their views on this.
Morning update
Swiss private label chocolate giant Barry Callebaut has acquired chocolate manufacturing assets from Burton’s Biscuits.
The British biscuit manufacturer has also signed a long-term agreement for over 12,000 metric tonnes of chocolate every year.
The Barry Callebaut Group has purchased Burton’s manufacturing assets for an undisclosed amount and will lease its site at Moreton in the Wirral, and will continue to make chocolate at the factory.
The move will allow the chocolate supplier to directly move into the UK confectionery market for the first time.
Earlier in the year Burton’s Biscuits looked set for a £400m merger with rival Fox’s, but it collapsed after funding fell through at the final hurdle.
“I am pleased to announce the signing of a long-term supply agreement with Barry Callebaut, the world’s leading chocolate manufacturer. Barry Callebaut shares our passion and motivation for baking the best quality products for our customers and consumers,” commented Nick Field, CEO of Burton’s Food Ltd.
“This new partnership, with their larger network and enhanced capabilities, directly supports our intent and commitment to maintain and enhance our industry-leading chocolate biscuit offering.”
“We are delighted to strengthen the collaboration with our longstanding customer Burton’s and to further support a great British brand,” said Antoine de Saint-Affrique, CEO of the Barry Callebaut Group.
“This transaction is an excellent example of the power of long-term partnerships and outsourcing. It is also a clear sign of our commitment to support the growth of our business in the UK market.”
Elsewhere, AIM-listed sports nutrition business Science In Sport (SIS), recorded a 20% jump in sales in the first half of 2018, driven by rapid growth in online sales.
The company however increased its losses, with underlying losses for the period growing to £1.6m from £1.1m in 2017, following increased investment. The company therefore said EBITDA losses are now expected to be higher than initially forecast.
Sales rose to £9.9m for the half year ending 30 June, up from £8.3m in the same period last year.
The year saw a 30% rise in sales through e-commerce, with online sales now accounting for 53% of the company’s revenue.
Sales were also boosted by 53% growth in international markets, with increased investment in the US and Italy.
The FTSE 100 has moved up 0.3% to 7,323pts in early trading, with measures in the escalating US-China trade war better than some had feared.
Early risers this morning included Devro (DVO), up 3.6% to 211.8p, SSP Group (SSPG), up 1.4% to 711.5p, and Science in Sport (SIS), up 1.1% to 70.5p.
Early fallers include Stock Spirit Group (STCK), down 1.9% to 191.4p, AG. Barr (BAG), down 1.5% to 728p, Greencore (GNC), down 0.9% to 188.7p.
Yesterday in the city
The FTSE 100 recouped some its losses after an early slump as trade concerns regarding the US and China continued to weigh down markets. It dropped around 0.03% to 7,300pts.
Yesterday, Kantar Worldpanel found overall grocery spending was up 3.8% in the 12 weeks to 9 September, with consumers spending on alcohol, soft drinks and ice cream through the “hottest summer on record”.
Ocado Group (OCDO) jumped a modest 0.8% to 919.8p, after it posted an 11.5% retail sales rise in the 13 weeks to 2 September 2018.
Other risers included Purecircle Limited (PURE), up 2.9% to 321p, Carr’s Group (CARR), up 2.8% to 146p, Devro (DVO), up 2.4% to 204.5p and Nichols (NICL), up 2.1% to 1,485p.
Yesterday’s fallers included Treatt (TRT), down 2.4% to 480p, Greencore (GNC), down 2.4% to 190p, British American Tobacco (BATS), down 1.9% to 3,600p.
No comments yet