RE: down nearly 5%20 Feb 2019 10:33
J Sainsbury plc (LON:SBRY) saw its shares plunge on Wednesday after UK regulators hinted they are swaying towards blocking the supermarket giant's proposed £10bn merger with Wal-Mart Inc (NYSE:WMT) owned Asda after an in-depth investigation found “extensive competition concerns”.
Provisional findings from the Competition and Markets Authority’s (CMA) probe suggested that the tie-up between the UK’s second and third largest food retailers could lead to a “worse experience” for shoppers both in-store and online.
READ: Sainsbury’s could absorb at least 132 store closures, says UBS
Top of their fears were that food and petrol prices could rise, while the quality and number of product ranges offered could reduce. Overall, the CMA found that any deal could lead to a “sUBStantial lessening of competition”, especially in areas in where Sainsbury’s and Asda stores overlap.
In reaction, Sainsbury's shares tumbled 13.2% lower to 249.80p, while rival food retailers also fell with Wm Morrison Supermarkets PLC (LON:MRW) - seen as a possible beneficiary from merger store sell-offs - shedding 4.6% at 229p, and market leader Tesco PLC (LON:TSCO) down 0.3% at 227p.