Sainsbury ‘blew credibility and cash’ on Asda deal

ONE of Sainsbury’s leading shareholders has accused the supermarket of ‘blowing money and credibility’ on its planned merger with Asda.

The investor, who wanted to remain anonymous, said it was not a surprise that regulators have effectively blocked the proposed £14bn tie up.

And they added that the pledge by Sainsbury’s chief executive Mike Coupe ( pictured) to fight on in a bid to rescue the deal was ‘a waste of time and money’.

Sainsbury’s had already splurged £17m in costs associated with the deal, such as advisory fees, by September 22, according to published figures.

But it is thought this figure has soared to around £50m to £60m.

Analysts declared the deal ‘dead in the water’ after the Competition and Markets Authority blocked it by warning it would push up prices and limit choice for millions of shoppers.

One top 20 investor said management should focus on getting back to the basics of running the business. The shareholder told the Mail: ‘ We were sceptical of management’s confidence on the deal going through when it was announced. The CMA announcement is not a surprise frankly.

‘The tone and mood music has been negative and increasingly worse than expected as the investigation has gone on.

‘The competitive landscape has got, if anything, more competitive and Sainsbury’s has now blown money and credibility on this merger.’

The investor added: ‘ Sainsbury’s is vowing to fight on. This is almost certainly a waste of time and money, when management need to refocus.’

Sainsbury’s and Asda could be forced to sell off as many as 300 stores if they want to seal their merger or face having it blocked altogether. The CMA reached its preliminary verdict after reviewing hundreds of thousands of Sainsbury’s and Asda’s internal documents and speaking with more than 60,000 shoppers and motorists. It is still to reach a final decision but the CMA warned it is ‘likely to be difficult’ for the supermarkets to address these concerns. More than £1.2bn has been wiped off Sainsbury’s value since the CMA’s announcement on Wednesday. A string of analysts have downgraded the supermarket’s target price, including its house broker, UBS. But the supermarkets have vowed to pursue the merger. The investor, however, urged Sainsbury’s to ‘cut their losses, accept the findings and walk away’. Suppliers have celebrated the CMA’s preliminary findings. Ged Futter, director of supplier consultancy GSCOP, said: ‘ From what I’ve heard from the suppliers, there’s a huge sigh of relief from all over the country.’