Sainsbury’s share price: Experts warn Asda tie-up not a done deal yet

on Jan 21, 2019
Updated: Mar 11, 2020

Experts have warned that J Sainsbury’s (LON:SBRY) tie-up with Walmart’s Asda is not a done deal, Reuters reports. The comments come as a court ruling indicated that a final regulatory verdict on the merger will be delayed until the end of April from early March.

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Sainsbury’s share price has fallen deep into the red this Monday, having given up 1.98 percent to 272.40p as of 13:55 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.06 percent higher at 6,972.14 points.

Not done deal yet

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Reuters reported today that some competition lawyers, analysts and rivals had warned that Sainsbury’s deal with Asda was not yet a done deal. The comments come as investors await the decision of the Competition and Markets Authority (CMA).

“Other than Sainsbury’s and Asda, it is hard to think of anyone involved in the industry that is publicly stating this takeover is not against the public interest,” said HSBC analyst David McCarthy, as quoted by the newswire, adding that he believed that the CMA would not pass the deal without substantial conditions, and that it could even be blocked in its entirety.

“There’s a real sense with [CMA chair Andrew] Tyrie’s arrival the CMA want to prove that they’ve got teeth,” one competition lawyer told Reuters. “They can block it by asking for a disproportionately large number of stores being divested.”

Ruling to be delayed

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Reuters separately reported on Friday that the Competition Appeal Tribunal (CAT) had said that extension of the deadline to April 30 for the final regulatory verdict on the tie-up was ‘now recognised to be necessary’.

The CAT judgment related to a case brought by Sainsbury’s and Asda against the CMA over its refusal to give them more time to respond to evidence.

As of 14:20 GMT, Monday, 21 January, J Sainsbury plc share price is 272.40p.

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