The grocery firms look vulnerable to third party bids
Thursday 28 Feb 2019 Author: Tom Sieber

Both Sainsbury’s (SBRY) and Asda could be vulnerable to takeovers as negative remarks from the competition watchdog appear to leave their merger dead in the water.

The Competition and Markets Authority’s (CMA) latest comments imply little chance of the supermarket merger happening, leaving Sainsbury’s looking weak as a standalone player and Asda looking a target for private equity as its parent company Walmart no longer seems interested in the UK.

Shore Capital analyst Clive Black suggests Walmart might consider floating Asda on the stock market instead and suggests bargain-basement retailer B&M European Value Retail (BME) could be a wildcard candidate to try and buy it.

Black adds that a further deterioration in Sainsbury’s share price, already down 19.3% to 232.4p since the CMA’s announcement on 20 February, could lead private equity to ‘run the slide rule’ over the group. He also flags that Sainsbury’s might return to the acquisition front itself as in his view the core business appears to be ‘ex-growth’.

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