ASDA’s parent company, Walmart, has also expressed disappointment at the move. So what happens now?
CEO Judith McKenna says Walmart’s focus is to “continuing to position Asda as a strong UK retailer delivering for customers”, adding
Walmart will ensure Asda has the resources it needs to achieve that.
There has been speculation that Asda could be sold off, perhaps to a private equity firm… but McKenna’s comments suggest Walmart will keep it.
Roger Burnley, CEO of Asda, says he’s disappointed with today’s ruling.
He also acknowledges that the merger has worried many Asda staff, who could have lost their jobs if the merger had gone through, saying:
We’re disappointed with their findings but will continue to find ways to put money back into customers’ pockets and deliver great quality and service in an ever changing and demanding market.
I have always been hugely aware that the last year has been an unsettling time for all of our colleagues and am immensely grateful for their commitment and dedication during that time. Our focus is now on the most important job we all have – delivering for our customers.”
Sainsbury: The deal’s off!
Sainsbury has confirmed that its £7bn takeover of Asda is now dead.
CEO Mike Coupe (for whom today’s ruling is a bitter blow) says the two companies have agreed to terminate the transation.
Coupe also savages the competition watchdog, saying its reasoning is faulty:
“The specific reason for wanting to merge was to lower prices for customers. The CMA’s conclusion that we would increase prices post-merger ignores the dynamic and highly competitive nature of the UK grocery market. The CMA is today effectively taking £1 billion out of customers’ pockets.
“Sainsbury’s is a great business and I am confident in our strategy. We are focused on offering our customers great quality, value and service and making shopping with us as convenient as possible.”
SAINSBURY-ASDA MERGER BLOCKED
Attempts to create Britain’s largest supermarket group have been crushed by competition authorities this morning.
Sainsbury and Asda have been told that their merger, announced last year, cannot go ahead as it would simply be bad news for consumer.
In a scathing judgement, just released, the Competitions and Markets Authority ruled that combining the two firms would have led to higher prices, lower quality, a worse range on the shelves, and a poorer overall shopping experience.
The CMA also concluded that online shoppers would also suffer from higher prices and reduced quality of service.
Motorists could also get stung, paying more for fuel at over 125 locations where Sainsbury’s and Asda petrol stations are located close together.
Stuart McIntosh, chair of the inquiry group, declares:
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.
We have concluded that there is no effective way of addressing our concerns, other than to block the merger.
That’s a blow for both companies, particularly Sainsbury (the UK’s second-largest supermarket chain) which has been losing market share in recent months in the ever-competitive retail sector.
Sainsbury had driven the now-defunct merger through a £7bn takeover of Asda, number 3 in the market and owned by Walmart.
Reaction to follow!
Also coming up today, we get a new health check on Britain and America’s factories:
- 11am BST: CBI industrial trends report
- 1.30pm BST: US durable goods orders