Shore Capital continues to see J Sainsbury (LON:SBRY) as a ‘hold,’ noting that no one is any the wiser about whether the Competition and Markets Authority (CMA) would wave the grocer’s deal with Walmart’s Asda through, Citywire reports. The comments came after the FTSE 100 supermarket’s chief executive Mike Coupe told MPs earlier this week that he expects the watchdog to demand store disposals to clear the tie-up.
Sainsbury’s share price fell in the previous session, shedding 1.99 percent to close at 310.50p. The shares underperformed the broader UK market selloff which saw the benchmark FTSE 100 index shed 70.96 points to end the session 0.93 percent lower at 7,556.44, following the Bank of England’s rate decision. The group’s shares have added more than 22 percent to their value over the past year, as compared with about a 1.6-percent rise in the Footsie.
ShoreCap sees Sainsbury’s as ‘hold’
Shore Capital reaffirmed Sainsbury’s as a ‘hold’ yesterday, following a committee hearing, where the grocer’s chief executive and his counterpart at Asda reiterated plans to cut prices by 10 percent. Citywire quoted the broker’s analyst Clive Black as commenting that the competition process was still to play for and pointed to the “pretty much universal opposition to the proposed merger at this stage”.
It’s CMA views that matter
“It is the Competition and Markets Authority views that matter,” the analyst elaborated, adding that the deal could “still be approved although we are far less clear as to the potential remedies and whether or not those remedies can be satisfied [...] We are also unclear about the ultimate timescale of this whole process”.
Black further argues that Sainsbury’s and Asda will face difficulty merging two businesses which must “compete in public and collude in private”.