FT : Merger mania returns?

Merger mania returns?

Just when DD thought we might’ve seen an end to the M&A boom, more than $40bn in deals from industrial software to trucking and decorative paints to telecoms got the fourth quarter off to a big start.

Schneider Electric’s $23.7bn acquisition of US engineering software provider PTC, the French industrial conglomerate’s biggest acquisition, led the charge on this Merger Monday.

The deal, first reported on Sunday by the FT, is the biggest Europe-to-US deal since 2021 and the second-biggest American acquisition by a French company on record, according to Dealogic.

Meanwhile, logistics firm CH Robinson agreed to buy trucking brokerage firm RXO for $5.8bn and Dulux owner AkzoNobel sold its south-east Asian decorative paints business to Nippon Paint for $1.35bn.

In the UK, some big brand names also made a splash, despite one being small and the other being history. Beyond BT’s acquisition of TalkTalk, Sainsbury’s held talks earlier this year with private equity-owned rival Morrisons over a potential multibillion-pound UK supermarkets deal before walking away, the FT reported.

Some of the challenges DD flagged in our third-quarter wrap hold true: rising interest rates, AI anxiety and midterm elections threaten to derail a blockbuster year for mergers and acquisitions.

But some astute readers couldn’t help but notice the dichotomy of our headlines on Monday, with one top banker sending a “funny” with the tears of joy emoji when he woke up to a $20bn-plus transatlantic deal next to our headline about the threats of an early end to the M&A boom.

It’s a good reminder that when it gets eerily quiet, you should get ready for some surprises.

FT : The creditor bloodbath in UK telecoms BT struck a deal to buy TalkTalk but

The creditor bloodbath in UK telecoms
BT struck a deal to buy TalkTalk but the majority of the struggling broadband provider’s creditors are likely to be left with nothing

A wipeout in UK telecoms
BT’s eleventh-hour acquisition of UK broadband provider TalkTalk may have given a lifeline to 1.5mn broadband customers. But the company’s owners and creditors owed almost £1.5bn have been afforded no such reprieve.

BT’s move to acquire the heavily indebted company out of administration is set to leave the majority of those lenders with nothing, said two people familiar with the matter. 

After years of pouring hundreds of millions of dollars into the broadband group, in the form of equity and debt at multiple parts of the capital structure, US private capital group Ares Management is set to receive a payout of more than £100mn.

Yet those creditors lower down the capital stack will not be so lucky, with BT’s offer likely failing to cover those in the most secure of TalkTalk’s bonds.

Ouch.

BT’s move will lead to it taking control of the business, shorn of its debts, as part of pre-pack administration, which will grant it a further 1.5mn UK broadband customers. BT said it anticipated the deal would result in a £400mn hit to its cash position in its current financial year.

The agreement came after the FT reported that BT chief executive Allison Kirkby had met government officials last week to discuss how to address competition concerns that could arise from combining two large broadband providers.

A deal between the companies would ordinarily trigger a competition review as Openreach, the broadband network owned by BT, is TalkTalk’s largest supplier.

But UK culture secretary Lisa Nandy on Monday said she had invoked a public interest intervention notice for the deal “to ensure that impacts on public health, critical national infrastructure and supply to vulnerable customers are fully considered as part of this process”.

Creditors are not the only unhappy party.

BT’s rival Virgin Media O2 said the deal had “all the characteristics of a stitch-up masked as a rescue deal in the public interest”.

The comments came days after the Competition and Markets Authority indicated it might block a £2bn deal by Nexfibre, a broadband provider part-owned by the company’s shareholders, to acquire its rival Netomnia, citing competition concerns.

It’s fair to say that TalkTalk has not been a good investment. BT will be hoping to change that.

FT : BMW’s €2bn bet on Germany Carmaker backs its home market even as domestic r

BMW’s €2bn bet on Germany
Carmaker backs its home market even as domestic rivals cut capacity and jobs

Hemmed in by residential neighbourhoods in one of Germany’s most expensive cities, a century-old factory in central Munich has become BMW’s production hub for its next generation of cars.

BMW’s main plant across the road from its corporate headquarters houses 6,000 workers who build the new all-electric version of the 3 Series. The German carmaker has sold more than 18mn units of the model since its launch in 1975, while production of the eighth generation started in August.

“This is where we build the cars of the future,” plant chief Peter Weber told the FT during a factory tour.

The Munich overhaul is at the heart of a high-stakes bet by BMW on the future of manufacturing in Germany. While Volkswagen and Mercedes are cutting capacity at home amid high labour and energy costs, BMW is trying to decouple itself from the decline of German industry, where up to 15,000 jobs disappear every month.

“We definitely see a future for Germany as a manufacturing location,” said the group’s head of production, Raymond Wittmann.

The factory, which started production with aircraft engines and motorbikes in 1922, has been rebuilt over the past five years. Manufacturing extends across three floors connected by lifts, with self-driving robots delivering parts straight to the assembly line.

BMW has invested about €2bn in its 3 Series production sites in Munich and Dingolfing and a new battery plant some 135km north-east of Munich. “That’s a very clear commitment to the location where we are based and where we are at home,” said Wittmann.

While the group also spent about €2bn on a new plant in Debrecen in Hungary and is axing more than 8,000 back-office jobs, blue-collar workers are excluded from the cuts. 

Like its rivals, BMW has been hit hard by falling sales in China and US tariffs. Milan Nedeljković, who became chief executive in May, warned in the summer that it would take more than five years for BMW’s operating profit margin to return to the longstanding range of 8 to 10 per cent. This year, the group is bracing for just 1 to 3 per cent.

But BMW’s domestic production has held up better than that of its German rivals. One in four vehicles made in Germany last year was a BMW, with production of 1.07mn cars, just shy of the number manufactured in 2024.


While German car production fell 10 per cent in 2025 from pre-pandemic levels, BMW saw a 6 per cent increase, helped by its decision to bring production of the Mini Countryman, the X1 and some 5 Series models in-house from partners in the Netherlands and Austria.

“Over the past few years, [BMW] has gained market share and consistently had better plant utilisation in Germany than Mercedes or Volkswagen,” said Patrick Hummel, head of European autos research at UBS.

As a premium brand, BMW faces less competition from new Chinese rivals in its home market for now. Compared with mass-market rivals, premium carmakers are eking out higher profit per vehicle, usually leading to higher margins, which helps them to accommodate German labour costs.  

“There is a different [corporate and managerial] culture at BMW,” Horst Ott, boss of IG Metall in Bavaria and a BMW supervisory board member, told the FT. BMW’s leadership was not just “thinking from one quarterly number of [earnings before interest and tax] to the next”, but took a longer-term perspective, he noted.

The group’s current position owes much to decisions taken years ago, including producing a higher share of its vehicles sold in China and the US locally. As a consequence, German factories are less affected by falling sales in Asia and the impact of Donald Trump’s tariffs.  

BMW also embraced electric cars earlier than its German rivals, launching the first i3 in 2013. The model was a commercial flop but taught BMW important lessons about the risks of dedicated EV production. 

The carmaker has been supported by firm underlying demand, which Hummel describes as “extremely strong”.

Helena Beron Wisbert, professor of automotive economics at Ostfalia Hochschule Wolfsburg, attributes this to a “relatively new” vehicle line-up and “state of the art technology” for electric vehicles.

The all-electric iX3 SUV, built in Hungary and the first model based on BMW’s “Neue Klasse” software-controlled platform, has attracted more than 100,000 orders since its launch a year ago, leaving buyers facing waits of up to a year.

“We’re ramping up production as fast as we can,” said Wittmann. Last month, BMW added a night shift to its Debrecen plant, with three shifts producing vehicles 24 hours a day. “The electric 3 Series could be as much of a blockbuster product as the iX3,” said Hummel.

Yet the carmaker cannot escape the challenging economics of producing in Germany. “From a hard-nosed economic perspective, there is little reason to invest in new plants in Germany,” said Moritz Kronenberger, fund manager at Union Investment, pointing to high labour and energy costs. “The money would probably be better invested elsewhere.” 

Weber, the BMW plant boss, said that despite the Munich plant’s history and proximity to headquarters, “we don’t enjoy any special status”. His plant has to be “just as competitive as every other production site”, he stressed. 

Production costs per vehicle have come down by 10 per cent following the plant’s modernisation and the “Neue Klasse” platform. The new system is digitised and simplified, and the number of parts delivered “just in time” has increased from 45 per cent to 68 per cent, reducing storage costs.

While labour costs per hour in Germany are about three times higher than in Hungary, the gap in overall production costs is much smaller, according to Wittmann.

“Taking everything together, there are not big differences,” he said. Material costs for an EV amount to €20,000-€25,000, while labour costs stand at €1,500-€2,000. German plants also benefit from their proximity to key suppliers, keeping logistics costs low.

Yet even inside BMW there are concerns that the economics could shift against its German plants. A person familiar with the thinking of a supervisory board member said the board member was “very, very worried” about Chinese competitors with newer technology and lower costs, and feared that further job cuts might become necessary in the future.

Wittmann said the competitiveness of German plants may deteriorate “over the medium to long term” if the supplier network shifted towards eastern Europe and more parts were sourced locally. Lower logistics costs “could shift the balance further” towards production in eastern Europe, he said. “That is why it is important that labour costs, energy costs and the overall system in Germany continue to be optimised.”

>>> US After Hours Summary: NEO -3.8% lower on earnings After Hours Gainers: Co

After Hours Summary: NEO -3.8% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to news:OPCH +21.7% (McKesson and CD&R are reportedly nearing a deal involving the company.), FRSH +4.1% (Will join the S&P SmallCap 600 before trading opens October 8, replacing BioLife Solutions.), LAB +3.9% (Agreed to sell its Microfluidics business to ARCHIMED, with closing expected in approximately 30 days.), AVNW +2.0% (Signed an India license-to-manufacture agreement with Dixon for WTM 4000 products, retaining intellectual property, software and services.), DRS +1.8% (Completed final training and delivery of INOD Block III thermal weapon sights to the Australian Army.), BETR +1.5% (Advances Birmingham Bank sale after buyer consortium escrows £10 million, with pro forma cash expected near $140 million.), ORIC +1.5% (Cancer Research UK will fully fund and execute ORIC-259 preclinical work and Phase 1/2 development.), HLP +1.2% (Appoints Michael W. Zhang chairman, while Jie Liu remains CEO and Chenglong Yang leaves the board.), BWXT +1.0% (Selected to provide BANR microreactor technology for a planned New Brunswick transportable nuclear power plant.), HTB +1.0% (Authorized a new 790,000-share buyback, representing about 5% of outstanding shares, after completing its prior program.)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance:NEO -3.8%

Companies trading lower in after hours in reaction to news:PCVX -4.6% (Launches separate $500 million stock and pre-funded warrant offering and $500 million convertible senior notes offering.), SYRE -4.0% (Launched an underwritten public stock offering, with size and terms yet to be determined.)

WWD : One Year On, Chanel’s Bruno Pavlovsky Talks Sales Growth, Retail Strategy

One Year On, Chanel’s Bruno Pavlovsky Talks Sales Growth, Retail Strategy and Matthieu Blazy Impact
“It could not have gone better,” the executive said of the critical and commercial reception of Blazy's first collections.

PARIS — A year after Matthieu Blazy’s debut show for Chanel, Bruno Pavlovsky is a happy man.

“Chanel is reenergized,” the brand’s president of fashion told WWD. “There’s a wonderful energy both inside the house and among our clients. People are picking up on that positive momentum, which we had perhaps lost a little before Matthieu’s arrival.”

The creative director’s collections are flying off shelves, despite market volatility that continues to weigh on global luxury sales, and Chanel has topped the Lyst rankings of the world’s hottest brands for the last two quarters.

Blazy is set to present his spring 2027 collection at the Grand Palais on Monday night, before hitting the road with a replica cruise show in Sydney on Nov. 5 and a Métiers d’Art unveiling in Rome on Dec. 2.

“This is almost the hardest part. Last year, we thought the first year would be the most difficult. Now, as we enter the second year, the bar is high, so we’re feeling the pressure. That’s part of the game, but I’m very confident, and it could not have gone better,” Pavlovsky said.

Social media has been awash with videos of hourlong queues at Chanel boutiques and ecstatic unboxings, in what has been termed “Blazymania.” The designer’s first main collection went on sale in March, and his most recent, for fall 2026, landed in stores on Sept. 20.

While Pavlovsky declined to comment on leaked first-half figures, which said comparable revenue rose 16 percent during the first six months of the year, the executive confirmed Chanel is ahead of the pack.

“We’re significantly outperforming the market,” he said. “The numbers are good. Almost all our boutiques are selling more product, more ready-to-wear. It’s a very exciting phase. The question is: how do we sustain this momentum in the months and years ahead?”

While the United States, Europe and Japan are all performing well, China and the rest of Asia have also proved surprisingly resilient, he reported.

“Despite the challenging context, our sales are growing. At a time when everyone is struggling, the quality of our collections and execution have helped us weather the storm,” he said. “But as far as 2027 is concerned, I remain extremely cautious.”

Managing Scarcity
For Pavlovsky, the main challenge now is to keep his faithful customers happy. Chanel doesn’t take pre-orders, so collection launches are typically frantic, as clients swoop down on previews to secure the best pieces.

“Right now, we’re all about managing scarcity, but it’s not because we’re not ordering enough. It’s because of the shelf life of our collections, which is two to three months on average,” he explained.

“Our pieces are produced in limited runs of 80 to 1,200 pieces per design. But say you have 1,200 pieces — you still need to divide them among 250 boutiques, so each boutique will receive no more than four or five pieces,” he added.

While that distribution model has remained unchanged since Blazy’s arrival, the process has come under growing scrutiny as demand for key runway looks often outstrips supply.

“That’s the beauty of fashion. There’s what catches your eye and sparks desire during the show, and there can never be enough of those pieces — we could make 10 times as many and still not have enough,” Pavlovsky admitted.

In order to give Blazy’s teams breathing room, the Chanel design studio has undergone its most wide-ranging reorganization since Karl Lagerfeld took the creative reins in 1983.

Where previously a single studio churned out 10 collections a year, the house has hired an additional 30 people and created three dedicated teams: one for haute couture, one for ready-to-wear and one for Métiers d’Art and cruise.

But the manufacturing network, which encompasses some 1,000 entities between tier 1 and tier 2 suppliers, has remained largely unchanged, even as the brand has broadened its offering into unisex designs and acquired historic French shirtmaker Charvet.

“When Matthieu designs more boyish items like men’s jackets, we obviously have to reach out to real men’s tailoring workshops to make those, and not just repurpose women’s jackets for men. That forces us to seek out new manufacturers, but at least 90 percent of our suppliers are the same as before,” Pavlovsky said.

The creative refresh has required specialized workshops to adopt new techniques, resulting in some delays, while certain collections naturally have shorter production windows.

For example, the spring line is slated to arrive in stores in late February or early March, and since much of Italy shuts down during the year-end holidays, it has to be completed in less than four months. That compares with a five- to six-month production window for the Métiers d’Art collection, timed to the pre-fall season.


“We are adapting not only the assortment, but also how to maximize the impact of this assortment in stores to try to better satisfy the needs of our clients. But we have enough merchandise in stores,” Pavlovsky said.

‘No Regrets’
Chanel continues to renovate seven to eight boutiques per year, and open another two or three. Following the opening of a Palo Alto unit in June, it plans to inaugurate a new store in San Diego on Thursday, a pop-up in Shanghai for the launch of the Coco Neige winter sports line on Oct. 14, and a renovated location in Melbourne on Nov. 11.

Ahead of the replica cruise show, Chanel is also opening a temporary store at the Chatswood Chase shopping center in Sydney on Oct. 16. “Australia is another promising market,” Pavlovsky said.

“We’re upgrading our retail network to offer the best possible experience to our growing number of clients, as more and more of them want access to our ready-to-wear collections. But not all of our boutiques around the world have enough space or a sufficient number of fitting rooms,” he noted.

The interior of the Chanel boutique in Palo Alto
The interior of the Chanel boutique in Palo Alto. Courtesy of Chanel
Chanel’s clients have been with the brand for nine years on average, he said. “Your expectations are not the same as when you push open the doors of a boutique for the first time,” Pavlovsky noted.

While he reported no major turnover in clientele, some categories have helped the brand recruit new fans.

“We’re meeting, for example, with our shoe collections, customers who may have felt previously that Chanel shoes weren’t fashion-forward or edgy enough. Now we’re attracting more trend-conscious customers who see something they like in the shoes,” he said.

While Chanel rides its fresh momentum, its former creative director Virginie Viard last week published a book lifting the lid on her dismissal in 2024, offering a rare glimpse into the inner workings of the privately held firm, owned by the secretive Wertheimer family.

“During Virginie’s tenure, including after Karl’s death, we pushed the house forward and prepared it for the current phase, so the mission was accomplished — and that, to me, is what matters the most. Of course, I understand her bitterness, but I didn’t want to read the book. I will read it for sure, but not right now,” Pavlovsky said.

“Chanel has always supported Virginie. I have no regrets,” he added. “We all know we’re just passing through. That’s the beauty of what we do. We find a house one way, and we leave it in another. What matters is that it keeps on growing.”

FT : McKesson and CD&R near $5bn-plus deal to buy infusion services provider Acq

McKesson and CD&R near $5bn-plus deal to buy infusion services provider
Acquisition of Option Care Health would be the latest buyout of an undervalued healthcare services company

Healthcare group McKesson and private equity firm Clayton Dubilier & Rice are closing in on a deal to buy the largest independent provider of medical infusion services in the US, valuing the business at more than $5bn including debt.

Option Care Health is in advanced talks to sell itself after receiving a joint bid from McKesson and CD&R, according to people familiar with the matter. A deal could be reached as soon as Tuesday, but it is yet to be formally agreed and discussions could fall apart, the people said.

Option Care last year served more than 315,000 patients nationwide requiring speciality medicines to treat illnesses such as cancer, autoimmune diseases and serious infections, via its at-home infusion services and at its 184 care centres.

The potential transaction would be the latest in a string of buyouts of undervalued healthcare services companies including mid-market private equity group Kinderhook’s $1.1bn recent takeover of home care and hospice group Enhabit.

The high costs of delivering medicines in hospitals and drugmakers’ push towards complex biologic medicines, which can only be administered via infusion, have provided a significant boost to Option Care’s business.

The deal was expected to value Option Care at more than $5bn including debt, the people said. Shares in Option Care are down 27 per cent this year, giving it an enterprise value of $4.6bn including its $1.2bn debt pile.

Under the terms of the deal being discussed, CD&R will own a 51 per cent stake in Option Care, while McKesson will own a 49 per cent stake, the people said. McKesson will have the right to purchase the buyout firm’s stake in the future, they added.

CD&R, which has a reputation as a complex carve-out specialist, has a history of collaborating with major healthcare companies including its purchase of a 50 per cent stake in Sanofi’s consumer health business Opella and its partnership with Elevance Health to combine some of their primary care businesses. CD&R also owns hospice provider Gentiva Health Services alongside Humana.

For McKesson, Option Care’s collection of at-home, oncology-focused and speciality infusion centres will complement its core business as the biggest US drug distributor. McKesson operates an extensive network of chemotherapy and cancer care clinics — one of the fastest-growing divisions of the $403bn-a-year revenue company.

Option Care and McKesson did not immediately respond to requests for comment. CD&R declined to comment.

Shares in McKesson are up 11.5 per cent since the start of the year, giving it a market capitalisation of about $107bn. Last month, the group struck a roughly $2.2bn deal to buy privately held Precision Medicine Group, a provider of clinical research and commercialisation services to drugmakers as part of the company’s push to grow its fastest-growing divisions.

McKesson’s chief financial officer Kenny Cheung last month said he would pursue growth by “being able to find the right deals that’s accretive . . . for overall platform and portfolio”.

Meanwhile, CD&R is seeking $26bn for its latest flagship fund, which would rank among the biggest raised in the buyout industry. The group has also sealed several successful exits this year, including offloading Indicor’s instrumentation business to industrials group Ametek for $5bn.

FT : US ‘monitoring’ situation around suspected case of plague in Russia Moscow

US ‘monitoring’ situation around suspected case of plague in Russia
Moscow has imposed sweeping quarantine measures in Siberia after death of plague research institute worker

The US has said it is monitoring developments relating to a suspected case of pneumonic plague in Russia, which has imposed sweeping quarantine measures in Siberia over the incident while insisting there has been no outbreak.

On Monday, US secretary of state Marco Rubio said Washington was watching the matter “closely” after an employee at Siberia’s Irkutsk Anti-Plague Research Institute was admitted to hospital outside the city on September 29.

“It seems there was a worker at the lab that was infected and there was concern that could have spread,” Rubio said. “Like anything else, if something like that gets out, it could quickly spread so we are watching and monitoring it closely.”

Daria Shipilova, 28, died two days later from what public health watchdog Rospotrebnadzor described as “pneumonia of unknown” origin. Local media reported that pneumonic plague may have been the cause of death.

If confirmed, it would be Russia’s first case of plague in a decade. Europe has not seen a human plague outbreak since the immediate aftermath of the second world war.

However, Rubio cautioned that he did not think the incident was “cause for alarm”.

Russian authorities have not confirmed a recorded plague infection. The public health watchdog said tests on samples from Shipilova did not detect micro-organisms “connected with her work”.

Speaking to reporters on Monday, Kremlin spokesperson Dmitry Peskov urged them “not to listen to rumours about a plague outbreak” and to “rely on Rospotrebnadzor’s statement”.

But the scale of the Russian authorities’ response suggested they were treating the situation as exceptional. Irkutsk region governor Igor Kobzev said in a social media post on October 2 that he held an “emergency meeting” with Rospotrebnadzor over “a suspected case of a highly dangerous infectious disease”.


Rospotrebnadzor was “carrying out the full range of anti-epidemic measures”, while everyone who had been in contact with Shipilova had been “placed under medical observation”, he added.

As many as 200 people were placed under observation, according to local media. The inpatient section of the Shelekhov district hospital was quarantined alongside several hospitals in Irkutsk, the independent People of Baikal outlet reported.

Only the quarantine at the Shelekhov hospital has been officially confirmed.

Staff at Shipilova’s institute were also isolated inside the building, “sleeping on chairs”, RFE/RL’s Siberia.Realities reported, citing sources.

On October 3, the head of the Irkutsk aluminium factory wrote on his Telegram channel that employees must wear face masks because of “contradictory information about plague”, but quickly edited the post to remove the mention of the disease.

According to the pro-Kremlin Telegram channel Mash, which has close ties to Russia’s law enforcement agencies, Shipilova had recently returned from a work trip to the country’s Buryatia region near the border with Mongolia.

Mongolia regularly records plague cases, with 17 confirmed instances reported to the World Health Organization between 2019 and 2025.

But Alexei Tsydenov, head of Russia’s Republic of Buryatia, said the woman who had “possibly died of plague” had not entered the region.

The US state department told the FT that “many details have not been confirmed” about the matter, adding that “we encourage Russian authorities to share accurate information quickly and openly”.

“Plague is a known disease and is treatable with common antibiotics, especially when treatment starts early,” the official added.

Shipilova joined the Irkutsk institute in 2022 and had served as a researcher in its plague microbiology department since 2023. This spring, she was listed among the authors of a presentation on antibacterial drug susceptibility of the plague-causing bacterium Yersinia pestis.

The last confirmed plague case in Russia was in 2016, in a tiny Altai Republic settlement near the border with Mongolia, when a 10-year-old boy contracted the disease after contact with a marmot that his grandfather killed while hunting. The boy survived after receiving treatment. 

The authorities did not dispute the diagnosis, isolated the boy’s contacts, disinfected affected areas and carried out an extensive campaign against marmot hunting.

FT: Sainsbury’s held merger talks with smaller rival Morrisons UK supermarkets d

Sainsbury’s held merger talks with smaller rival Morrisons
UK supermarkets discussed potential multibillion-pound deal between November and February before Sainsbury’s walked away

Sainsbury’s held talks this year with private equity-owned rival Morrisons over a potential multibillion-pound deal that would provide a fresh test of regulators’ appetite for consolidation in the UK’s fiercely competitive supermarket industry.

Preliminary discussions over a combination between the companies took place between November 2025 and February this year before Sainsbury’s decided to walk away, according to people familiar with the matter.

There are no active talks between the two sides, although people close to the situation did not rule out negotiations restarting in the future. Sainsbury’s and Morrisons declined to comment.

A combination of Britain’s second- and fifth-largest supermarkets would shake up the industry and potentially create a more formidable competitor to market leader Tesco. On paper, it would form a grocery business with a 23.6 per cent market share, narrowing the gap to Tesco, which controls 27.8 per cent of the market, according to Worldpanel by Numerator.

However, Sainsbury’s would almost certainly be required to sell stores to gain approval for any deal, which would be closely scrutinised by the Competition and Markets Authority.

In 2019, the UK’s competition watchdog blocked Sainsbury’s attempt to buy Asda, the UK’s third-largest supermarket, for £7.3bn on the basis that it would result in a loss of competition and higher prices for customers. 

Since then, a historic bout of food inflation has led to further scrutiny of rising grocery prices in the UK, meaning that any attempted merger would be politically sensitive.


Competition in the industry has intensified further since the attempted Sainsbury’s-Asda merger. Aldi and Lidl have continued to open stores, with the German discounters now accounting for a combined 19.3 per cent of grocery sales. Aldi has broken into the industry’s “big four” at the expense of Morrisons.

The discounters are now designated by the Groceries Code Adjudicator, an industry regulator, and the CMA as “large grocery retailers” — a shift that people in the industry expect will form an important part of the deliberations around any future supermarket combination. 

Morrisons has lost significant ground since it was acquired for £10bn including debt by private equity firm Clayton Dubilier & Rice in 2021. The deal loaded its balance sheet with £7.5bn debt at a time of sharply rising borrowing costs.

For Sainsbury’s, the talks come at a time when chief executive Simon Roberts has made headway with his desire to focus the business more firmly on food. The company has exited banking and recently agreed to sell Argos, its general merchandise chain.

Shares in Sainsbury’s, which has a market capitalisation of £7.2bn, fell slightly on news of the lapsed talks and were broadly flat in afternoon trading on Monday.

The company operates more than 600 supermarkets and almost 900 convenience stores. Morrisons operates about 500 supermarkets and over 1,700 convenience stores, around 700 of which are franchise outlets.