Sainsbury’s-Asda merger

  1. Asda bought by billionaire Issa brothers in £6.8bn deal

    Two billionaire brothers from Blackburn have won the battle to buy Leeds-based supermarket Asda from Walmart, in a deal valuing the supermarket chain at £6.8bn.

    An Asda sign

    A consortium of Zuber and Mohsin Issa and private equity firm TDR Capital will take a majority stake in Asda.

    It means the grocer will return to majority UK ownership for the first time in two decades.

    The Issa brothers own EG Group, which has more than 5,200 petrol stations across the UK and Europe.

    A spokesperson for the Issa brothers and TDR Capital declined to comment on how they are funding the deal.

    The auction process for Asda has lasted for several months. US-based Walmart decided to sell a controlling stake in Asda after shelving plans to float the business following a failed £7.3bn merger with Sainsbury's, which was blocked on competition grounds.

    Walmart bought Asda in 1999 for £6.7bn and it will retain a minority stake in the supermarket chain.

    Announcing the deal, Walmart said Asda would keep its headquarters in Leeds and its chief executive, Roger Burnley, would remain in place.

  2. BreakingHundreds of management jobs to go at Sainsbury's

    Sainsbury's branch

    Sainsbury's is to cut "hundreds of management roles" in the next few months by "streamlining its structure".

    The supermarket chain - which also owns Argos - said it has already cut its leadership team by 20% since last March.

    "We have to adapt to continue to meet the needs of our customers now and in the future and, while change can be hard, it’s also necessary," said chief executive Mike Coupe.

    The company has been busy cutting costs since its attempt to merge with Asda was blocked in April by the Competition and Markets Authority and is now busy integrating further with Argos, that it bought in 2016.

  3. 'Heads down' at Sainsbury's

    Today Programme

    BBC Radio 4

    Catherine Shuttleworth of Savvy Shopper also told the Today Programme that Sainsbury's had a "strong" management team - led by chief executive Mike Coupe - but was facing challenges after its attempt to merge with Asda was blocked in April by the Competition and Markets Authority.

    "The failure of getting that deal through – which still surprised a lot of the grocery market - has meant they have had to start on a new track for their future and review their strategic way forward.

    "I think that means that Mike and the senior team have had to get their heads down and focus on the business and look at what they can do in a world where margin is reduced in the supermarket business.

    "So it's about how do you make the most of other things and make the most of the Argos tie-up in particular.

    "It's been a big part of the British business scene for some time. All retailers have to continually reinvent themselves"

  4. Coupe 'staying put' at Sainsbury's

    Mike Coupe is chief executive at Sainsbury's
    Image caption: Mike Coupe is chief executive at Sainsbury's

    As Business Live reported earlier, the boss of Argos - the retailer owned by Sainsbury's - is moving to become chief financial officer at WPP.

    Shore Capital analyst Clive Black reckons John Rogers' departure could mean that the supermarket group's chief executive Mike Coupe is staying where he is even after the Competition and Markets Authority blocked Sainsbury's £7.3bn bid for Asda.

    "To our minds, Rogers was the prime internal candidate to replace Mike Coupe... should the incumbent boss wish to hang up his boots. With this announcement, it's maybe the clearest smoke signal yet that Coupe is going nowhere," said Mr Black.

  5. Sainsbury's plan 'does not go far enough'

    Today Programme

    BBC Radio 4

    Sainsbury's

    Following the demise of its merger with Asda, Sainsbury's unveiled a reorganisation that includes closing a number Argos stores and opening branded shops within its supermarkets.

    While the moves were welcomed, for some, the plan did not go far enough.

    George Godber, fund manager at Polar Capital. says: "There was an element of realism in how to run the business in what is a tough industry post the furore of the Asda deal so there was some welcome stuff in there.

    "But but this wasn't as a plan really give enough of an indication on how the business is going to get through the next five years and on path to growth."

  6. Ten-year ban for Sainsbury's-Asda merger

    Supermarket

    Asda and Sainsbury's cannot attempt another merger for at least 10 years, the Competition and Markets Authority has confirmed.

    Formally closing its investigation into the proposed tie up, it said the supermarket giants were legally bound not to join forces for a decade, which is the standard CMA prohibition period.

    The ban also applies to US giant Walmart, which is not allowed to acquire any interest in Sainsbury's as long as it still owns part of Asda.

    The CMA blocked the tie-up in April over fears it would raise prices for consumers. The deal would have created the UK's biggest supermarket chain, accounting for £1 in every £3 spent on groceries.

  7. 'Reward for failure'

    BBC Radio 5 Live

    Wake Up To Money

    Mike Coupe

    Mike Coupe, the chief executive of Sainbury's, has received a 7% pay rise to £3.8m after the collapse of the Asda deal because the competition authorities blocked the tie-up over fears it would raise prices for consumers.

    Laura Lambie, senior investment director at Investec Wealth and Investment told Radio 5 Live's Wake Up To Money: "His performance has to be tied into what he’s paid for. It looks on the face of it as if he’s being rewarded for failure which is not good".

    A year ago, Mr Coupe apologised after being caught on camera singing "We're in the money". He was filmed singing the words to the show tune as he was waiting to be interviewed for ITV News.

  8. Sainsbury's/Asda deal could be blocked for ten years

    woman shopping

    The Competition and Markets Authority is proposing that any merger between Asda - owned by US retailer Walmart - and Sainsbury's should be blocked for ten years.

    The proposal is outlined in documents published by the CMA following its decision to block the block the tie-up last month.

    The CMA said the deal would raise prices for consumers, at the supermarkets' petrol stations and lead to longer checkout queues.

    The competition watchdog is inviting comments by 5pm on Monday 24 June 2019.

  9. Time for a plan B?

    Dominic O'Connell

    Business Presenter, BBC Radio 4 Today programme

    sainsbury's store

    Sainsbury’s chief executive Mike Coupe was not his usual tiggerish self when presenting this set of results. He gave the impression of someone trying to make the best of a less than ideal outcome – which, of course, he was.

    In his ideal world he would have been talking about the final preparations for the merger with Asda, but that was blown out of the water by the Competition and Markets Authority last week.

    Instead he was left to describe a fairly mundane set of annual results in glowing terms.

    They show a company that is fighting hard on all fronts – trying to compete against aggressive low-price rivals and a resurgent Tesco, while at the same time finding the money to improve its stores, reduce debt and maintain dividend payments to shareholders.

    Once you include restructuring costs, a £46m hit on the failed deal with Asda, statutory profits were down one-third to £219m – a tiny number for a company that has annual sales of £32bn.

    Sainsbury insiders had warned against expecting a big strategic relaunch, a Plan B, after the Asda failure. Shareholders will still be disappointed that there wasn’t one, and will no doubt be pressing hard on whether – or rather when – it will emerge.

  10. Investors waiting for concrete Sainsbury's plans

    More on Sainsbury's.

    John Moore, senior investment manager at Brewin Dolphin, said the figures were robust.

    "The business may have lost market share, but it is still performing at a good level, aided by the integration and enhanced offering of Argos – the Asda transaction would have offered the potential to push this to another level.

    While there is a commitment to increase and accelerate investment in the business from management, investors will be waiting for more concrete plans in the months ahead to see what Sainsbury’s next step will be," he said.

  11. Coupe: 'you'll be talking to me again'

    Today Programme

    BBC Radio 4

    So is Mike Coupe going to leave as Sainsbury's chief executive after the failed Asda bid?

    He tells BBC Radio 4's Today Programme that we will be "talking to me again. I'm sticking with the company. I'm very proud of the organisation I run".

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