The Lemon Fool

We fundamentally disagree with the provisional findings. These misunderstand how people shop in the UK today and the intensity of competition in the grocery market. The CMA has moved the goalposts and its analysis is inconsistent with comparable cases.

Combining Sainsbury's and Asda would create significant cost savings which would allow us to lower prices. Despite the savings being independently reviewed by two separate industry specialists, the CMA has chosen to discount them as benefits.

We are surprised that the CMA would choose to reject the opportunity to put money directly into customers' pockets, particularly at this time of economic uncertainty.

We will be working to understand the rationale behind these findings and will continue to make our case in the coming weeks.

20 February 2019: The CMA has provisionally found extensive competition concerns as part of its in-depth investigation of the proposed merger between Sainsbury’s and Asda.

Horsey wrote:Strange that the Tesco and Morrisons share prices have also gone down on the news.....

J Sainsbury (LSE: SBRY) has fallen to earth with quite a bang this week. Its radical plan to transform the trading landscape through a ‘super-merger’ with Asda is seemingly in tatters after the Competition and Markets Authority suggested it would throw out the planned tie-up as it would be bad for consumers. Suggesting that an alliance could lead to “higher prices, reduced quality and choice, and a poorer overall shopping experience,” Sainsbury’s may be forced to go back to the drawing board to rescue its failing food operations.

The scale of the setback was underlined by the sharp sell-off of Sainsbury’s stock in the wake of the news. The supermarket’s share price collapsed to its cheapest for almost a year as people scratched their heads as to what other steps it can take to reinvigorate its declining stature with British shoppers.

Horsey wrote:Strange that the Tesco and Morrisons share prices have also gone down on the news.....

To say that the bosses of J Sainsbury (LSE:SBRY) and J D Wetherspoon (LSE: JDW) aren’t united in their views on Brexit is an understatement.

The supermarket’s chief executive Mike Coupe has been prominent among the UK’s big retail bosses in warning that a no-deal Brexit and trading under World Trade Organisation terms would increase food prices, cause significant disruption, and could put national food security at risk.

Meanwhile, Wetherspoon’s Brixiteer boss Tim Martin has lauded the prospect of a clean break from the EU and free trade, on the grounds it would reduce shop and food prices and be good for his customers.

Whatever the ultimate terms of the final divorce decree and economic repercussions, I’m convinced Sainsbury’s is a stock to avoid, while I’d happily buy Wetherspoon’s shares today, and hold them for the long term. Here’s why.

Ominous

Sainsbury’s has been struggling for a good number of years now. I was unconvinced by its acquisition of Argos in 2016. This upped its exposure to discretionary consumer spending which, from an investment perspective, is not really what I want from a defensive sector like food.

Its announcement last year of an agreed merger with Asda was more promising in this respect. However, as I warned readers, there was a chance the competition regulator would block it, and that even if it did go ahead, I would view it as fraught with execution risk. It now looks like the merger is unlikely to happen.

idpickering wrote:This from TMF;

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https://www.fool.co.uk/investing/2019/0 ... k-instead/

PinkDalek wrote:

idpickering wrote:This from TMF;

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https://www.fool.co.uk/investing/2019/0 ... k-instead/

That one from Graham Chester (fka MobyDick) who is usually a good read. If you are able to state the author's name, it may encourage others to follow your TMF links (or not, as the case may be). Sorry to say it but I rarely do, although I chanced my arm this time.

Whilst here, thanks for the tip re refreshing the TMF pages, when without a log-in.

The Competition and Markets Authority (CMA) has today published its Final Report on the proposed merger of J Sainsbury plc (Sainsbury's) and Asda Group Limited (Asda), resulting in prohibition of the merger. As a result, Sainsbury's, Walmart and Asda have mutually agreed to terminate the transaction.

Sainsbury's CEO, Mike Coupe, said:

"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."

J Sainsbury (LSE: SBRY) was dealt a blow this morning when the Competition and Markets Authority (CMA) announced it had blocked the company’s planned merger with Asda. The shares slumped over 6% in early trading.

Here, I’ll give my view on Sainsbury’s prospects as a standalone business, and whether I’d personally buy, sell, or hold the shares today.

monabri wrote:I think Mr C 's singing didn't help! When he sang "we're in the money" he was probably thinking of his bonus.

Dod101 wrote:For the CMA to block a merger seems unusual.