J Sainsbury’s (LON:SBRY) proposed merger with Walmart’s Asda could increase pressure on farmers, a union has warned. The comments come as the Competition and Markets Authority (CMA) continues with its in-depth investigation into the tie-up which is set to create Britain’s biggest supermarket, surpassing Tesco (LON:TSCO).
Sainsbury’s share price has climbed into positive territory in today’s session, having added 1.30 percent to 310.80p as of 09:58 GMT. The shares are outperforming the broader market, with the benchmark FTSE 100 index currently standing 0.80 percent higher at 7,003.27 points. The grocer’s shares have added more than 36 percent to their value over the past year, as compared with about a 5.7-percent drop in the Footsie.
Farmers flag Asda deal concerns
The National Farmers’ Union (NFU) said in a statement yesterday that it had told the CMA that the proposed merger of Sainsbury’s and Asda could lead to increased pressure on farmers and reduce the choice and innovation of products available for shoppers.
“The consolidation of retail buying power is one of the biggest concerns farmers and growers have about the proposed merger,” the NFU’s head of food and farming Philip Hambling said in an oral evidence session this month, adding that the union had concerns that the tie-up’s “desire to reduce prices even further could leave farmers as the ones to take the brunt of significant market disruption”.
The comments came after a major supermarket supplier recently warned that the merger would be ‘extremely detrimental’ to consumers.
Analysts on FTSE 100 supermarket
Berenberg Bank reiterated its ‘buy’ rating on the blue-chip grocer last week, with a price target of 369p on the shares. According to MarketBeat, Sainsbury’s currently has a consensus ‘hold’ rating and an average price target of 310.69p.