SAINSBURY’S BOSS: WE’RE IN THE MONEY
He’s caught boasting on TV cameras over £14bn Asda merger
THE boss of Sainsbury’s was left red-faced last night after being recorded singing We’re In The Money as the supermarket announced its £14.1billion merger with Asda.
Mike Coupe, 57, sang the tune from musical 42nd Street between interviews at the London Stock Exchange as he promised to cut prices of food essentials by 10 per cent.
Shares in Sainsbury’s rose by 14.5 per cent as the City welcomed the deal – putting £860million on the value of the firm and £470,000 on Mr Coupe’s own shares.
Company chiefs insist they will not need to close any of the 2,800 stores the new firm will run – even if the shops were side by side.
However, industry analysts questioned the validity of price cut claims designed to paint the deal as positive for shoppers and staff.
The Competition and Markets Authority (CMA) is to investigate the merger that will effectively see Sainsbury’s take over Asda, which is owned by Walmart.
The US grocery giant is being paid £2.97billion by Sainsbury’s and it will be given a 42 per cent stake in the new business. Asda is valued at £7.3billion by the deal that brings it under the control of Sainsbury’s, which is worth £6.8billion. The mega- supermarket will overtake Tesco as Britain’s biggest retailer, with annual sales of £51billion across 2,800 Sainsbury’s, Asda and Argos stores.
The new firm will be better placed to cope with budget chains Aldi, Lidl and Iceland, as well as meeting the challenge from Amazon as it expands its online groceries service.
Mr Coupe will run the new firm of more than 330,000 employees and a combined market share of 31.4 per cent. The company said it expected to lower prices by about 10 per cent on many everyday products.
And Mr Coupe said: ‘I’m 100 per cent confident that we will not close any stores as a result of this transaction.’
But in a clip released by ITV, he was shown between interviews singing: ‘ We’re in the money, the sky is sunny. Let’s lend it, spend it, send it rolling along.’ He later said he had been caught in an unguarded moment, adding: ‘This is an incredibly stressful day and maybe it was an unfortunate choice of song.’
The CMA has no power to ensure vague promises of price cuts are delivered.
Analysts believe some stores are likely to be sold or, if there are no buyers, closed. It is likely thousands of jobs will be cut at Asda’s Leeds head office and in management of the combined firm in a move to save £500million.
Pricing expert James Brown, of Simon- kucher, which advises supermarket suppliers, was sceptical that prices will fall.
He said: ‘The wording is carefully chosen. key value items – those that shoppers use as benchmarks and shape price image – are likely to drop. Beyond this, the impact is not at all clear.’
He suggested suppliers rather than the new company would come under pressure to foot the bill. on store closures, Charles Hall, of retail analyst Peel Hunt, said: ‘We see no chance of it getting through the CMA without a major dismemberment of the combined business.’
The Unite union has called for ‘guarantees on jobs’ and demanded meetings with senior bosses. Lib Dem leader Sir Vince Cable, the former business secretary, and Labour’s business spokesman, Rebecca Long-Bailey, said the CMA would have to investigate the impact on shoppers. Miss Long-Bailey warned that, in the absence of proper vetting, it would be ‘British shoppers that suffer from rising prices and British workers that may be fearing for their jobs’.
Mr Coupe has asked the CMA to fast-track its inquiry in the hope it will be completed by the second half of next year.
‘An unfortunate choice of song’
Two years of secret talks culminated in the deal to merge Sainsbury’s and Asda into Britain’s biggest supermarket group with sales of £51bn.
The tie-up is the brainchild of Sainsbury’s chief executive mike Coupe, who kicked off discussions in 2016 with an approach to former colleagues from his days as an Asda executive.
But the deal was only finalised on Sunday when Coupe, his chairman David Tyler and other executives gathered at the City headquarters of investment bank UBS, a key Sainsbury’s adviser. The agreement followed a rush of meetings, phone calls and transatlantic flights in the past few weeks as executives shuttled between Sainsbury’s offices in the City, Asda in Leeds and walmart in the US.
Now a wave of consolidation could sweep the industry, with speculation mounting that Amazon could be prepared to make a bid for a UK supermarket. Details of the deal emerged as Sainsbury’s revealed an 18.7pc fall in annual profits to £409m, with sales at stores open for more than 12 months growing by just 1.3pc.
The figures highlight the challenges faced by the big supermarkets from ultra- cheap German competitors Aldi and Lidl.
Coupe, 57, recognised the potential for a deal with Asda in early 2016. he had worked there until 2004 before moving to Sainsbury’s and got in touch with his old boss there David Cheesewright, who was by then head of the international arm of Asda’s US owner walmart. The pair began discussions but they were soon put on the back burner as Coupe spotted another opportunity and snapped up Argos for £1.4bn, in a deal that closed in September 2016.
But by April last year, it was again ready to move on Asda.
As the talks moved on, key players included Judith mcKenna, who replaced Cheesewright as walmart’s international head and is another former Asda colleague of Coupe’s. Asda’s boss roger Burnley also had an important role. he had worked for Coupe at Sainsbury’s until 2016.
The two sides had been planning to make the announcement public on wednesday but were forced to bring this forward when details leaked. It meant the deal was sealed hurriedly on Sunday at UBS. Coupe will be chief executive of the combined firm with Burnley running the Asda stores.
The deal is understood to have the backing of the Sainsbury family – which owns around 6pc of the supermarket – as well as Qatar’s sovereign wealth fund, the biggest shareholder with a 22pc holding. Sainsbury’s shares up 14.5pc, or 39.2p, at 309p.
It is paying walmart £3bn and the US giant will also be given a 42pc stake in the new merged business. Asda is valued at £7.3bn by the deal that brings it under the control of Sainsbury’s, which is worth £6.8bn.
The new group will overtake Tesco to become the biggest retailer in Britain, with annual sales of £51bn across 2,800 Sainsbury’s, Asda and Argos stores.
It will face scrutiny from the Competition and markets Authority. meanwhile, the City is rife with talk about how rivals will respond. Analysts believe morrisons might seek to buy the Co-op and could even counter-bid for Sainsbury’s or Asda.