Sainsbury CEO concedes Asda merger could be scuppered by regulators; expects GBP 500m-plus synergies
10 SEP 2018
J Sainsbury’s [LON:SBRY] proposed merger deal with competitor supermarket chain Asda could be thwarted by the Competition and Markets Authority (CMA) in certain “extreme scenarios”, according to Sainsbury Chief Executive Mike Coupe, FT.com reported. However, he added he is confident the merger has a “pretty good” likelihood of being approved.
Regulators could demand measures which make the transaction hard to complete, the item reported. Coupe said it is a question of profitability rather than the number of shops, noting that either side can walk away from the deal if ebitda falls below a certain level.
Coupe said Sainsbury has informed the CMA it expects gross buying synergies arising from the merger to be significantly more than GBP 500m (USD 646m). Analysts largely expect the figure to be between GBP 1bn and GBP 1.5bn, the report said. Coupe added that the expects the net cost savings from the deal ultimately to be substantially higher than GBP 500m too, the item reported.
While shop closures are not expected, store divestments are a certainty, Coupe said. He declined to say how many shops might be disposed of or to name potential buyers.
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