Sainsbury’s boss has warned that regulators could force Britain’s second-largest supermarket to pull out of its proposed merger with rival Asda.
Last month, the Competition and Markets Authority (CMA) kicked off a formal investigation into the merger amid concerns over the potential for higher prices and worse quality of service. Both Sainsbury’s and Asda have asked the CMA to fast-track the investigation into the more in-depth phase 2 stage, something which could be announced as early as this week.
Sainsbury’s CEO Mike Coupe has said there are some “extreme scenarios” where the remedies demanded by regulators might render any deal pointless.
“There is an Ebitda [earnings before interest, tax, depreciation, and amortisation] threshold at which point either party has the right to walk away,” he told the Financial Times. “It’s not a number of stores, it’s a level of profitability.”
Sainsbury’s has previously stated the combined group will benefit from buying produce at the lowest price each company pays. However, it has not disclosed how much this gross cost saving will be worth.
Full Content: Financial Times