Merger failure leaves Asda's doors open for Amazon to knock

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Sky's Ian King outlines the potential ramifications of the CMA's decision to block the Sainsbury's tie-up with Asda.

When Sainsbury's and Asda announced plans for their blockbuster merger just over a year ago, every analyst in the City warned they would have trouble getting the deal past the Competition & Markets Authority.Mike Coupe, the Sainsbury's chief executive and the key architect of the merger, had three key arguments that he hoped would win the day.should the merger go through.

Both Sainsbury's and Asda also pointed out that, since competition regulators last studied the narrower UK grocery market in detail, the complexion of that sector had changed considerably with the German budget retailers Aldi and Lidl grabbing a combined 14% share. Much of that has come at the expense of Asda and Sainsbury's.It had, he noted, just allowed the merger of bookmakers Ladbrokes and Coral - cutting the number of big high street bookies from four to three.

The enlarged business would have been the UK's biggest fuel retailer and, with Asda currently being one of the most aggressive competitors on price in the field, the CMA had fears competition would have been eroded. As for Mr Coupe's third argument, that appears to have fallen on deaf ears, with Sainsbury's and Asda overlooking that the CMA is now under new leadership, in the shape of Andrew Tyrie, the prickly former chairman of the Commons Treasury Select Committee.

Some investors will also inevitably call for Mr Coupe, as the key driving force behind the deal, to go. He added:"Where was the arm around the [chief executive's] shoulder to say that it appears the game is up and maybe we should be focusing upon the day job, as our share demonstrably lags the whole market and not just the Big Four; never mind critically assessing a quite calamitous financial performance from Sainsbury Bank?"

 

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Why would amazon be interested? Did you just add their name for keyword spamming or something?

Remember some 30 years ago I wrote to the then head of Sainsburys, as they were No. 1 then, with a Plan for them to expand with smaller outlets, now Sainsburys Local, or Tesco Express as they are now. They said it would NEVER work & sent me a 10-page report on why. Was I wrong?

This is very bad news for sainsburys They are in deep trouble.

If the door is already open why the fuck would they knock

Amazon in cahoots with Wal-Mart ! Wouldn’t work for same reasons surely !

Eye vs sound the results of the larger eye do not bother the country

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