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U.K. Competition Agency Nixes Asda and Sainsbury Merger

05/02/2019

The U.K. Competition and Markets Authority has issued a negative ruling on the proposed merger of Asda, a Walmart subsidiary and leading supermarket chain Sainsbury’s.

Judith McKenna, CEO of Walmart International noted “It was against the backdrop of competition that we decided to explore the proposed merger with Sainsbury’s – an opportunity which would have further strengthened the Asda business and delivered benefits to U.K. customers”. McKenna continued “While we’re disappointed with the final report and conclusions, our focus now is on continuing to position Asda as a strong U.K. retailer delivering to customers. Walmart will ensure Asda has the resources it needs to achieve that”.

Roger Burnley, CEO of Asda commented “We were right to explore the potential merger with Sainsbury’s which would have delivered great benefits for customers and supported the long-term sustainable success of our business. We are disappointed with the findings of the Authority, but will continue to find ways to put money back into customer’s pockets and deliver great quality and service”.

The decision of the Competition and Markets Authority could be regarded as a negative for Walmart since the transaction would have placed the burden of management on Sainsbury’s with Walmart benefitting from dividends on their intended minority equity position. The proceeds of the sale were to have been used as part of the $16 billion purchase of a controlling interest in Flipkart of India.